Yes, your bank account can go negative, and the bank will charge you for it
A bank account goes negative when you spend more money than you have in it. This happens most often when a debit card transaction, check, or automatic bill payment clears for more than your balance. The bank lets the transaction go through anyway—this is called an overdraft—and your account balance drops below zero.
When this happens, you now owe the bank money. The bank will charge you an overdraft fee, usually between $25 and $35 per transaction, though some banks charge more. If your account stays negative for several days, the bank may charge you additional fees for each day it remains overdrawn. You are responsible for bringing your account back to zero or above.
Not all banks handle overdrafts the same way. Some will decline the transaction instead of allowing the overdraft. Others will allow it but charge a fee. A few banks offer overdraft protection, which links your checking account to a savings account or credit line and automatically transfers money to cover the shortfall—though this usually comes with its own fee.
Key Takeaways
- An overdraft fee is charged each time a transaction pushes your account negative, typically $25 to $35 per occurrence.
- Multiple transactions can trigger multiple overdraft fees in a single day, even if they are small amounts.
- You must repay the negative balance yourself; the bank will not forgive it or treat it as a loan.
- You can opt out of overdraft coverage at most banks, which means transactions will be declined instead of creating a negative balance.
- If your account stays negative for 30 to 60 days without payment, the bank may close your account and report you to ChexSystems, a banking history database.
How overdraft fees stack up in a single day
Banks process transactions in a specific order, and this order matters. Most banks clear larger transactions before smaller ones, even if the smaller ones happened first. This means if you have $50 in your account and make a $60 debit card purchase, then a $10 coffee purchase, the bank might process the $60 first (triggering one overdraft fee), then the $10 (triggering another overdraft fee). You now owe $70 plus two overdraft fees—roughly $50 to $70 in fees alone.
Some banks cap the number of overdraft fees they charge in a single day. Others do not. Federal rules do not limit how many overdraft fees a bank can charge, so it is possible to rack up $100 or more in fees from a handful of small transactions. This is why checking your balance before spending is critical, and why many people choose to opt out of overdraft coverage entirely.
What happens if you do not pay the negative balance
If you leave your account negative and do not deposit money to cover it, the bank will eventually take action. After 30 to 60 days of an unpaid negative balance—the exact timeline varies by bank—the bank will typically close your account. At that point, you still owe the bank the full negative amount plus all overdraft fees that were charged.
Once your account is closed for non-payment, the bank may report the debt to a collection agency. The bank may also report your account closure to ChexSystems, a banking history database that other banks use to decide whether to open accounts for you. A ChexSystems report can make it difficult or impossible to open a new checking account at most banks for up to five years. You can request your ChexSystems report for free at www.chexsystems.com.
If the debt is large enough, the bank may pursue legal action or sell the debt to a third-party collector. At that point, you may face wage garnishment or bank levies if you do not respond to collection attempts.
Opting out of overdraft coverage
Most banks allow you to opt out of overdraft coverage. When you do, transactions that would overdraw your account are simply declined instead. Your debit card will not work, your check will bounce, and your automatic payment will fail—but you will not be charged an overdraft fee and your account will not go negative.
Bounced checks and declined transactions can still cause problems. A bounced check may trigger a fee from the merchant or the payee, and repeated declined transactions can damage your relationship with creditors or service providers. But opting out prevents the spiral of overdraft fees that can turn a small mistake into a large debt.
To opt out, contact your bank directly—by phone, in person, or through online banking. Some banks make this easy; others bury the option. Ask specifically to opt out of overdraft coverage for debit card transactions and ATM withdrawals. Note that opting out does not always apply to checks or automatic bill payments, which are sometimes covered under different rules.
Overdraft protection as an alternative
Some banks offer overdraft protection, which links your checking account to a savings account, money market account, or credit line. If a transaction would overdraw your checking account, the bank automatically transfers money from the linked account to cover it. This prevents the overdraft fee and keeps your account positive.
Overdraft protection usually costs $10 to $15 per transfer, which is less than a typical overdraft fee. However, if you do not have money in the linked savings account, the protection does not help. If the linked account is a credit line, you are borrowing money and will owe interest on the transfer. Read your bank's terms carefully to understand exactly when transfers happen and what they cost.
Recovering from a negative account and ChexSystems report
If your account has gone negative and been closed, your first step is to pay the bank what you owe. Contact the bank and ask for an itemized statement of the negative balance plus all fees. Negotiate if you can—some banks will waive or reduce fees if you pay the full balance quickly, especially if this is your first overdraft incident.
Once you have paid, ask the bank in writing to remove the account closure from your ChexSystems report. Banks are not required to do this, but some will if you have paid in full and the account was closed due to overdraft rather than fraud. If the bank refuses, you can dispute the report directly with ChexSystems by mail or through their website.
After paying off a negative account, wait at least 30 days before opening a new account at another bank. ChexSystems reports take time to update, and opening multiple accounts in quick succession can look like fraud to other banks. When you do open a new account, choose a bank that offers overdraft opt-out by default or makes it easy to enable.
The difference between overdrafts and NSF fees
An overdraft fee is charged when the bank allows a transaction to go through even though your account does not have enough money. An NSF fee (non-sufficient funds) is charged when the bank declines a transaction because you do not have enough money. The fee amounts are often the same—$25 to $35—but they happen in opposite situations.
If you have opted out of overdraft coverage, you will see NSF fees instead of overdraft fees. If you have not opted out, you will see overdraft fees. Some transactions, like checks and automatic bill payments, may trigger NSF fees even if you have overdraft coverage enabled, because the bank processes them differently than debit card transactions.
Frequently Asked Questions
Can a bank close my account if it stays negative?
Yes. Most banks will close an account that remains negative for 30 to 60 days without payment. Once closed, you still owe the negative balance plus all overdraft fees. The bank may report the closure to ChexSystems, which can prevent you from opening accounts at other banks for several years.
What is the difference between overdraft and a line of credit?
An overdraft happens when you spend money you do not have and the bank charges you a fee. A line of credit is money the bank lends you in advance, and you pay interest on what you borrow. Overdraft protection can use a line of credit, but a regular overdraft is not a loan—it is a fee for going negative.
If I pay my negative balance, will the overdraft fees go away?
No. Overdraft fees are separate from the negative balance. If your account is $50 negative and you were charged two $35 overdraft fees, you owe $50 plus $70 in fees—$120 total. Paying the $50 does not erase the fees. Some banks will negotiate or waive fees if you pay quickly, but this is not may provide.
Can I dispute an overdraft fee?
You can ask your bank to waive or reduce the fee, especially if it is your first overdraft or if the fee was caused by a bank error. Banks are not required to reverse fees, but many will as a courtesy to long-standing customers. Call your bank and explain the situation. If they refuse, you can file a complaint with the Consumer Financial Protection Bureau (CFPB).
Will a negative bank account affect my credit score?
A negative checking account does not directly appear on your credit report. However, if the bank closes your account and sells the debt to a collection agency, the collection account will appear on your credit report and damage your score. ChexSystems reports also affect your ability to open new bank accounts, though they are separate from credit reports.