Your bank will charge you an overdraft fee, and the negative balance stays on your account until you deposit money to cover it

When you spend more money than you have in your checking account, your bank does one of two things: it either declines the transaction, or it lets it go through and charges you a fee. Which one happens depends on whether you have overdraft protection enabled and what your bank's specific rules are. If the transaction goes through, you now owe your bank money—your account balance is negative—and they will charge you a fee for allowing it.

The negative balance itself does not disappear on its own. It sits there until you deposit enough money to bring your account back to zero or above. During that time, your account is in what banks call an overdraft state. Some banks will also charge you a daily or weekly fee for each day your account stays negative, on top of the initial overdraft fee.

Key Takeaways

  • A single overdraft transaction typically costs $25 to $35 in fees, though this varies by bank.
  • If your account stays negative for more than a few days, many banks charge an additional daily fee until you deposit money.
  • Your bank may close your account if you stay negative for too long or overdraft repeatedly, and report you to ChexSystems, which affects your ability to open accounts elsewhere.
  • Opting out of overdraft protection stops your bank from covering transactions when you lack funds, but you will still owe fees if they do cover them anyway.
  • Depositing money when ready stops additional fees from accumulating, even if you cannot cover the full negative balance right away.

How overdraft fees work and what they cost

When a transaction pushes your account negative, your bank charges an overdraft fee—a flat fee for allowing the transaction to go through. This fee is not interest; it is a one-time charge per transaction. The amount varies by bank. Most banks charge between $25 and $35 per overdraft transaction, though some charge more and a few charge less.

The fee is deducted from your account when ready or within one business day, which makes your negative balance even larger. If you had $50 in your account and spent $100, you now owe $50. Your bank then charges a $30 overdraft fee, so your balance is now negative $80. You owe the bank $80 before your account is back to zero.

Some banks also charge a sustained overdraft fee or extended overdraft fee—an additional charge if your account stays negative for more than a set number of days, usually five to seven. This fee is typically the same amount as the initial overdraft fee and can repeat daily or weekly until your balance is positive again. If you stay negative for two weeks, you could be charged multiple fees on top of the original one.

When your bank might close your account

Banks have the right to close your checking account if you overdraft repeatedly or stay negative for an extended period. There is no federal rule about how many overdrafts trigger a closure—each bank sets its own threshold. Some banks close accounts after three overdrafts in a rolling period; others tolerate more. The key factor is pattern: one overdraft is usually forgiven, but a pattern of overdrafts signals to the bank that you are not managing the account responsibly.

If your account stays negative for 60 to 90 days without any deposit, most banks will close it. When they close your account, they may send your debt to a collection agency if the negative balance is large enough. They will also report the closure to ChexSystems, a banking history database. This report stays on your ChexSystems record for five years and makes it difficult to open a new checking account at most banks during that time.

Before closing your account, banks are usually required to give you notice—typically 30 days—so you have time to deposit money or move your account elsewhere. Read any notice from your bank carefully; it will specify the date the account will close and what happens to any remaining balance.

The difference between overdraft protection and overdraft fees

Overdraft protection is a service that covers transactions when you do not have enough money, usually by linking your checking account to a savings account or credit line. If you have overdraft protection enabled and you overdraft, your bank transfers money from your linked account to cover the shortfall. You still pay a fee—usually $10 to $15—but it is smaller than a standard overdraft fee, and you do not end up with a negative balance.

Without overdraft protection, your bank can still cover the transaction and charge you an overdraft fee. The difference is that you have no backup source of funds, so your account goes negative and you owe the bank money. You can opt out of overdraft coverage entirely, which means transactions will be declined if you lack funds. However, some banks still charge a fee for the declined transaction attempt, so check your bank's specific policy.

Overdraft protection is not automatic; you have to set it up. If you have a savings account at the same bank, you can usually link it in your online banking portal or by calling customer service. If you do not have a savings account, some banks offer overdraft protection through a credit line, though this is less common and may require a credit check.

How to stop the negative balance from getting worse

The moment you realize your account is negative, deposit money. You do not have to cover the entire negative balance when ready—any deposit will stop additional fees from accumulating. If your account is negative $80 and you deposit $50, your balance is now negative $30, and the daily overdraft fees stop. You can then deposit the remaining $30 later.

Deposits made before your bank's daily cutoff time (usually 2 p.m. or 3 p.m. on business days) are typically available the same day. If you deposit via ATM or mobile app after hours, the money may not be available until the next business day, but the overdraft fees will still stop once the deposit clears. Direct deposits and transfers from another account at the same bank are usually when ready.

If you cannot deposit money when ready, contact your bank and ask if they will waive or reduce the overdraft fee as a one-time courtesy. Banks are not required to do this, but many will if you have a good account history or if this is your first overdraft. Be direct: explain what happened and ask what they can do. The worst they can say is no.

What happens to your credit score

An overdraft itself does not directly damage your credit score. Credit bureaus (Equifax, Experian, TransUnion) do not see your checking account balance or overdraft history. However, if your negative balance is sent to a collection agency and reported as a debt, that will show up on your credit report and lower your score.

This typically happens only if your account stays negative for 60 to 90 days and the bank closes the account. If you deposit money and bring your balance positive within a few weeks, the bank will not report it to a collection agency, and your credit score will not be affected.

The ChexSystems report that results from a closed account is separate from your credit report. It does not affect your credit score, but it does affect your ability to open a new checking account. Banks check ChexSystems when you explore for an account, and a negative report can result in denial.

How to avoid overdrafts in the first place

The simplest way to avoid overdrafts is to keep a buffer in your checking account—money you do not spend. Many people keep $200 to $500 as a minimum balance so that small mistakes or unexpected charges do not push them negative. This is not a rule; it is a personal choice based on how often you check your balance and how predictable your spending is.

Set up balance alerts through your bank's app or website. Most banks let you set a threshold—for example, alert me when my balance drops below $100—and they will send you a text or email when you hit that point. This gives you time to deposit money before a transaction pushes you negative.

Review your account regularly. Check your balance before making large purchases or before payday if you know you are running low. Many overdrafts happen because someone forgets about a pending transaction or does not realize how much money they actually have available. Your available balance and your account balance are sometimes different; available balance accounts for pending transactions, so check that instead.

Frequently Asked Questions

Can my bank charge me multiple overdraft fees for one transaction?

Most banks charge one overdraft fee per transaction, even if that transaction pushes you negative by a large amount. However, if you have multiple transactions that overdraft on the same day, you may be charged a fee for each one. Some banks cap the total overdraft fees you can be charged in a single day—often at two or three fees—but this varies by bank.

What is the difference between an overdraft and a bounced check?

An overdraft is when your bank covers a transaction and charges you a fee. A bounced check is when your bank declines the check because you do not have enough money. With a bounced check, the check is returned unpaid, and you may be charged a fee by both your bank and the recipient's bank. Bounced checks can also damage your relationship with the person or business you wrote the check to.

If I move money from another account to cover the negative balance, when does it stop the fees?

Transfers between accounts at the same bank are usually when ready and stop fees when ready. Transfers from another bank take one to three business days to clear, depending on the banks involved. Until the money actually arrives in your account, your balance is still negative and fees may continue to accumulate. Use a transfer within the same bank if you have one available.

Will my bank let me set up a payment plan for the negative balance?

Most banks do not offer payment plans for overdraft balances. They expect you to deposit money to bring your account positive. However, if the negative balance is very large and has been sent to a collection agency, you may be able to negotiate a payment plan with the collection agency, not the bank. Call your bank first to ask; some have hardship programs for customers in difficult situations.

Can I dispute an overdraft fee?

You can ask your bank to reverse or waive an overdraft fee, but whether they will depends on your account history and their policies. If this is your first overdraft or if you have been a customer for a long time with no previous issues, banks are more likely to help. If you overdraft frequently, they are unlikely to waive fees. There is no legal right to dispute an overdraft fee the way you can dispute a fraudulent charge, but it never hurts to ask.