Your bank covers the transaction, then charges you a fee

When you overdraft your account, your bank pays the transaction that would have bounced. You keep the money you tried to spend. In exchange, the bank charges you an overdraft fee—typically $25 to $35 per transaction, though some banks charge less and some charge more. The fee appears in your account within one to three business days.

You now owe the bank both the original amount you overspent and the fee. Your account balance is negative. Until you deposit money to cover it, you remain in overdraft, and additional transactions may trigger additional fees.

Not all banks handle overdrafts the same way. Some decline the transaction instead of covering it, which means the payment fails and you avoid the fee but the merchant may charge you a separate returned-payment fee. Others offer overdraft protection, which links your checking account to a savings account or credit line and transfers money automatically when you go negative. Read your bank's overdraft policy in your account agreement or online—it determines what happens next.

Key Takeaways

  • Your bank covers an overdraft transaction and charges you a fee of $25 to $35, leaving your account negative by that amount.
  • Multiple overdrafts in one day can each trigger a separate fee, sometimes totaling $100 or more before you deposit new money.
  • Interest does not accrue on a negative balance the way it does on a credit card, but the longer you stay negative, the more fees you may accumulate.
  • You can ask your bank to reverse one or two overdraft fees if you have a clean history, though they are not required to do so.
  • Switching to a bank with no overdraft fees or enabling overdraft protection can prevent this situation in the future.

How multiple overdrafts stack up in a single day

If you make several purchases or payments while your account is negative, each one can trigger its own overdraft fee. A bank processes transactions in a specific order—usually largest to smallest, or in the order they were submitted—and charges a fee for each transaction that pushes you further into the red.

Example: Your balance is $50. You make a $30 purchase (fee charged, balance now -$35), then a $20 purchase (fee charged, balance now -$90), then a $15 purchase (fee charged, balance now -$140). Three transactions, three fees, totaling $75 to $105 in charges depending on your bank's rate. This happens even if you deposit $100 later that day—the fees were already assessed when each transaction posted.

Some banks cap the number of overdraft fees per day or per statement cycle. Others do not. Check your account agreement or call your bank to learn their limit. If there is no cap, a day of heavy spending while overdrawn can cost you more in fees than the amount you actually overspent.

The timeline for your account to recover

Your account stays negative until you deposit enough money to cover both the original overdraft amount and all fees. The clock does not reset automatically—you must take action.

If you deposit $100 into an account that is -$85 (original overspend plus one fee), your new balance is $15. If you deposit $50, your balance is -$35 and you remain overdrawn. Some banks will not allow you to make new transactions or withdraw cash while your account is negative, though you can still receive deposits.

Interest does not accrue on a negative balance the way it does on a credit card or loan. However, if you stay overdrawn for an extended period—typically 30 to 60 days depending on the bank—the bank may close your account and report you to ChexSystems, a banking history database. Future banks will see this report and may deny you a new account.

What happens if you ignore the overdraft

Ignoring an overdraft does not make it disappear. Your bank will continue to hold you responsible for the negative balance and any additional fees that accrue. If you make more transactions while overdrawn, more fees are charged. If you receive a direct deposit, the bank may apply part of it to your negative balance automatically, depending on your account agreement.

After 30 to 60 days of remaining overdrawn, most banks close the account. You will receive a notice in the mail. Once closed, you cannot use the account, but you still owe the negative balance. The bank may send the debt to a collection agency, which will contact you by phone and mail demanding payment. A collection account will damage your credit score and appear on your credit report for seven years.

Some banks will negotiate a settlement—you pay a portion of what you owe and the rest is forgiven—but this is not may provide. The best approach is to deposit money as soon as you realize you are overdrawn, even if you can only cover part of the balance.

How to ask your bank to reverse an overdraft fee

Banks are not required to reverse overdraft fees, but many will do so once or twice if you have a good history with them. Call your bank's customer service line and ask to speak with someone who can review your account. Explain that you overdrafted and ask if they can remove the fee as a courtesy.

Your chances are better if you have been a customer for several years, have no previous overdrafts, and ask within a few days of the fee being charged. Banks are more likely to help if you can show the overdraft was caused by a timing issue—a paycheck that arrived late, an unexpected charge, or a processing delay—rather than poor account management.

If the representative says no, ask to speak with a supervisor. If that does not work, consider switching banks. Some banks, particularly online banks and credit unions, do not charge overdraft fees at all or charge significantly less. The cost of switching is usually lower than the cost of paying overdraft fees repeatedly.

Banks and services that do not charge overdraft fees

Several banks have eliminated overdraft fees entirely or offer accounts where overdrafts are declined instead of covered. Chime, Ally Bank, Charles Schwab, and some credit unions offer checking accounts with no overdraft fees. Instead, transactions are declined if you do not have enough balance, and you receive a notification. This prevents you from going negative, though the merchant may charge a returned-payment fee.

Other banks charge lower fees—$15 to $20 instead of $35—or cap the number of fees per day. Some offer overdraft protection, which links your checking account to a savings account or credit line. When you overdraft, money transfers automatically from the linked account, preventing the negative balance and the fee. This costs nothing if you have money in the linked account, though some banks charge a small transfer fee.

If you frequently overdraft, switching to a no-fee bank or enabling overdraft protection is often cheaper than paying multiple fees per month. Compare your current bank's overdraft policy to these alternatives before deciding to stay.

How overdrafts affect your credit and banking history

An overdraft itself does not appear on your credit report. Your credit score is based on credit accounts—credit cards, loans, lines of credit—not checking accounts. However, if your overdraft goes unpaid for 30 to 60 days and the bank sends it to a collection agency, the collection account will appear on your credit report and lower your score by 50 to 100 points or more.

Overdrafts do appear in ChexSystems, a banking database that most banks check when you apply for a new account. If you have multiple overdrafts or an unpaid overdraft, banks may deny your application or require you to pay the balance before opening an account. This can make it difficult to switch banks or open accounts at new institutions.

The best way to protect your credit and banking history is to keep your account out of overdraft. Set up account alerts through your bank's app or website so you receive a notification when your balance drops below a certain amount—usually $100 or $200. This gives you time to deposit money before a transaction pushes you negative.

Frequently Asked Questions

Can a bank charge me multiple overdraft fees for a single transaction?

No. Each transaction that causes an overdraft triggers one fee. However, if you make multiple transactions while overdrawn, each one is charged separately. Some banks process transactions in order of size (largest first) rather than the order you made them, which can increase the number of fees you pay in a single day.

Do I have to pay overdraft fees if I deposit money the same day?

Yes. Overdraft fees are charged when the transaction posts to your account, not when you deposit money. Even if you deposit funds later that day, the fees have already been assessed. You will owe both the original overdraft amount and the fees.

What is the difference between an overdraft and a returned payment?

An overdraft means your bank covered the transaction and charged you a fee. A returned payment means your bank declined the transaction because you did not have enough money. The merchant may charge you a returned-payment fee of $15 to $30. Which one happens depends on your bank's overdraft policy and whether you have overdraft protection enabled.

Will an overdraft show up on my credit report?

An overdraft alone does not appear on your credit report. However, if you do not pay it and the bank sends it to a collection agency, the collection account will appear on your report and damage your credit score. This typically happens after 30 to 60 days of non-payment.

Can I get my overdraft fee reversed if I call the bank?

Banks may reverse one or two overdraft fees as a courtesy, especially if you have a good history with them and ask within a few days of the charge. There is no may provide, but it is worth asking. If the first representative says no, ask to speak with a supervisor.