Your bank will charge you an overdraft fee, usually $25 to $35 per transaction that pushes you below zero
When you spend more money than you have in your checking account, the bank covers the difference temporarily. This is called an overdraft. The bank then charges you a fee for allowing this to happen — typically $25 to $35 per transaction that went through while your account was negative. Some banks charge one fee per day instead of per transaction, which can cost less or more depending on how many transactions you make.
The fee hits your account immediately or within one business day. If you're already negative, the fee makes you more negative, which can trigger another fee on your next transaction. This creates a chain reaction that some people call "overdraft spiraling." A single mistake — like forgetting a pending charge — can cost you $75 to $100 in fees before you realize what happened.
Not all banks charge the same amount. Credit unions typically charge less, sometimes $25 or nothing at all. Online banks often charge nothing for overdrafts. If you bank with a large national bank, expect to pay more. Check your account agreement or call your bank's customer service line to find out your specific overdraft fee.
Key Takeaways
- Each transaction that overdraws your account triggers a separate fee, usually $25 to $35, and multiple fees can stack up in a single day.
- Your bank covers overdrafts automatically unless you have opted out, but you must repay the negative balance plus all fees.
- Overdraft protection linked to a savings account or credit line can prevent fees, but it costs money to set up and may charge interest.
- You can request that your bank reverse one or two overdraft fees if you have a clean history, but this is a one-time courtesy most banks will not repeat.
- The fastest way out is to deposit money immediately to cover the negative balance and all fees, or contact your bank to discuss a payment plan.
How overdraft fees stack up and when they stop
Banks process transactions in an order that is not always the order you made them. Many banks process larger transactions before smaller ones, even if you made the small purchase first. This means you can overdraft on a transaction that happened later in the day, triggering a fee, even though you thought you had enough money when you made the earlier purchase. The fee then makes your balance more negative, which can trigger another fee on the next transaction.
Fees stop accumulating once your account balance goes back to zero or positive. If you deposit $200 into a negative account, the bank applies that money to your negative balance first, then to any fees owed. Once both are covered, new transactions will not trigger overdraft fees. However, if you still owe money after the deposit, you remain responsible for paying it back.
Some banks cap the number of overdraft fees you can be charged in a single day — often three to five fees maximum. Others have no daily cap. Check your account agreement to see whether your bank limits daily fees. Even with a cap, you can still owe hundreds of dollars if you make many transactions while negative.
Overdraft protection and whether it's worth the cost
Overdraft protection is a service that prevents overdraft fees by pulling money from another account or credit line when your checking account runs short. The most common type links your checking account to a savings account at the same bank. When you overdraft, the bank automatically transfers money from savings to checking to cover the difference.
This sounds helpful, but it has costs. Some banks charge a transfer fee each time they move money from savings to checking — usually $10 to $15 per transfer. If you overdraft multiple times in a month, these transfer fees add up. Other banks offer free transfers but pay almost no interest on savings, so you lose money by keeping a buffer there instead of elsewhere.
Overdraft protection linked to a credit line (sometimes called a credit line overdraft) works differently. The bank lends you money at an interest rate, usually 17% to 21% annually. You pay interest on the borrowed amount until you pay it back. This is cheaper than overdraft fees if you repay quickly, but expensive if the debt sits for months.
The best overdraft protection is one you do not need to use: keeping a small buffer in your account so you never go negative. If you cannot maintain a buffer, overdraft protection linked to savings is usually cheaper than paying per-transaction fees, as long as you do not overdraft more than two or three times per month.
How to get overdraft fees reversed
Banks will sometimes reverse overdraft fees as a one-time courtesy, especially if you have been a customer for years and have never asked before. Call your bank's customer service number and ask to speak with someone in the overdraft department or a supervisor. Explain what happened and ask whether they can reverse the fee.
Your chances are better if you can show that the overdraft was caused by a bank error, a delayed deposit, or an unusual circumstance — not repeated carelessness. Banks are more likely to help if you have a clean account history with no previous overdraft reversals. Be honest about what happened. If you say the bank made a mistake when you actually forgot to check your balance, the bank will likely deny the request.
Do not expect the bank to reverse multiple fees or to do this more than once. Most banks have a policy of one reversal per customer per year, or one reversal ever. After that, you are responsible for all overdraft fees. If the bank refuses, you have no legal recourse — overdraft fees are part of your account agreement.
Paying back a negative balance and avoiding collection
Once your account is negative, you owe the bank money. The bank will not close your account immediately, but they will keep trying to collect. They may freeze your account so you cannot make new transactions, or they may send your debt to a collection agency if you do not pay within 30 to 60 days.
The fastest way to resolve this is to deposit enough money to cover the negative balance plus all fees. If you cannot do this in one payment, contact your bank and ask about a payment plan. Some banks will work with you on a schedule, especially if you show you are serious about paying. Others will not negotiate and will simply wait for you to deposit money or send your debt to collections.
If your account goes to collections, the collection agency will contact you by phone and mail. They can sue you for the debt, and if they win, they can garnish your wages or freeze other bank accounts you own. This is rare for small overdraft amounts (under $500), but it happens. Paying the bank directly is always cheaper and faster than dealing with collections.
Opting out of overdraft coverage
You can tell your bank to stop covering overdrafts. This means transactions will be declined if you do not have enough money, rather than going through and charging you a fee. To opt out, call your bank or visit a branch and ask to disable overdraft coverage on your checking account.
Opting out prevents overdraft fees, but it can cause problems. Checks may bounce, automatic bill payments may fail, and merchants may charge you a returned-payment fee. A bounced check can also damage your credit if the merchant reports it. For this reason, opting out works best if you monitor your account closely and keep a small buffer.
Some banks have changed their overdraft policies in recent years, making it harder to opt out or charging fees even when you have opted out. Read your account agreement carefully or ask your bank directly what happens if you decline overdraft coverage. The answer varies by bank.
When a negative account affects your credit and other financial accounts
A negative checking account does not directly hurt your credit score. Credit bureaus do not track checking account balances. However, if your account goes to collections and the collection agency reports it to the credit bureaus, it will damage your credit for seven years.
A negative account can affect other financial accounts you have. If you have a loan or credit card with the same bank, the bank may use a process called offset to take money from your other accounts to pay the negative balance. This is legal and happens without your permission. If you have direct deposit set up with that bank, they may also hold your next paycheck to cover the debt.
If you are trying to open a new bank account, the bank may check ChexSystems, a database that tracks banking history. A recent negative account or collection may show up and cause the new bank to deny your application. This is why paying off the debt quickly matters — it keeps the problem from spreading to other parts of your financial life.
Frequently Asked Questions
Can the bank take money from my paycheck if my account is negative?
Yes, if your paycheck is deposited directly into the same bank where you owe money. The bank can use a process called offset to hold part or all of your deposit to cover the negative balance and fees. This happens automatically and you cannot stop it. If this is a problem, ask your employer to deposit your paycheck into a different bank instead.
How long does a bank keep a negative account open before closing it?
Banks vary, but most will close an account that stays negative for 30 to 60 days without payment. Some close faster, some slower. Once closed, the bank may send your debt to collections. Call your bank to ask their specific policy if your account is negative.
Will my negative account show up on my credit report?
Not unless it goes to collections. A negative checking account balance alone does not appear on your credit report. However, if the bank sends the debt to a collection agency and that agency reports it, it will show up and hurt your credit score for seven years.
Can I dispute an overdraft fee if I think the bank made a mistake?
Yes. Call your bank and explain what happened. If the bank processed a transaction out of order or made an error, they may reverse the fee. However, if you simply miscalculated your balance, the bank will likely keep the fee. Be specific about what went wrong and ask to speak with a supervisor if the first person says no.
What's the difference between overdraft fees and NSF fees?
Overdraft fees are charged when the bank covers a transaction that would make your account negative. NSF (non-sufficient funds) fees are charged when a transaction is declined because you do not have enough money. Some banks charge both; others charge only one. Check your account agreement to see which fees apply to you.