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. For allowing this, the bank charges you a fee — typically $25 to $35 each time a transaction goes through while your balance is negative. Some banks charge multiple fees in a single day if several transactions hit while you're overdrawn.

The fee itself makes your balance even more negative. If you had $5 in your account and spent $20, you now owe the bank $15 plus the overdraft fee, bringing your total debt to $40 or $50. This can happen quickly if you're not watching your balance closely.

You have a limited window — usually one to three business days — to deposit money and bring your account back to zero before the bank takes further action. During this time, the negative balance sits there, and you may not be able to make new transactions.

Key Takeaways

  • Each transaction that overdrafts your account triggers a separate fee, so multiple purchases in one day can result in multiple charges.
  • You typically have one to three business days to deposit money and cover the negative balance before the bank may close your account or report you to a checking account database.
  • Some banks offer overdraft protection, which links your checking account to a savings account or credit line and transfers money automatically to prevent overdrafts.
  • If you don't pay back the negative balance, the bank may close your account and report you to ChexSystems, making it harder to open accounts at other banks.
  • Opting out of overdraft coverage means transactions will be declined rather than charged a fee, but you won't be able to spend money you don't have.

How overdraft fees stack up in a single day

Banks process transactions in an order that is not always the order you made them. Many banks clear larger transactions first, which can cause smaller transactions to overdraft even if you made them earlier in the day. This practice is called reordering, and it can multiply your fees.

Example: You have $100 in your account. You buy coffee for $5, then gas for $60, then groceries for $50. If the bank processes the $60 and $50 first, both will go through. Then the $5 coffee will overdraft because your balance is now negative. You'll pay one fee for that coffee. But if you had made four small purchases instead, you could have paid four separate fees in a single day — one for each transaction that pushed you below zero.

Federal rules now require banks to process transactions in the order you made them, not by size. However, some banks still have older systems or process certain types of transactions (like checks or automatic payments) differently than debit card purchases. Check your bank's specific rules in your account agreement or by calling customer service.

What happens if you don't pay back the negative balance

If you leave your account negative for more than a few days without depositing money, the bank will send you a notice — usually by mail or email — asking you to bring your balance current. The notice will include a important date, typically 10 to 30 days depending on your bank.

If you don't respond or deposit money by that important date, the bank will close your account. They will keep any money you deposit to cover the negative balance, and they may send your account to a collection agency if the debt is large enough. The bank will also report the closed account to ChexSystems, a database that tracks banking problems. Other banks check ChexSystems when you try to open a new account, and a negative report can make it very difficult to open a checking account elsewhere for several years.

You can still use your debit card or write checks after your account is closed, but they will bounce — meaning the transactions will be declined and you'll face additional fees from merchants or the bank.

Overdraft protection: automatic transfers from savings or a credit line

Many banks offer overdraft protection, a service that automatically transfers money from another account (usually your savings account) or from a credit line when your checking account would go negative. This prevents the overdraft fee entirely, but you pay a different cost: you lose the money in your savings account, or you go into debt on a credit line.

Overdraft protection is not automatic — you have to set it up with your bank. You can usually do this online, by phone, or in person. You'll choose which account to link (savings, money market, or credit line) and how much you want to transfer each time an overdraft would occur.

The advantage is that you avoid overdraft fees and your account stays in good standing. The disadvantage is that you may not notice you're spending more than you earn, because the transfers happen silently. You could drain your savings account without realizing it, or rack up credit card debt. Some people find it helpful; others find it masks a spending problem.

Opting out of overdraft coverage means declined transactions instead of fees

Federal law gives you the right to opt out of overdraft coverage. This means that if you try to spend more than you have, the transaction will straightforward be declined — like trying to use a credit card that's maxed out. You won't pay an overdraft fee, but you also won't be able to complete the purchase.

To opt out, contact your bank and ask to decline overdraft coverage. You can usually do this online, by phone, or in person. Some banks make opting out straightforward; others bury the option. If you can't find it, call customer service and ask specifically for the form to opt out of overdraft protection.

Opting out is useful if you want to force yourself to spend only what you have. The downside is that a declined transaction can be embarrassing (your card gets rejected at the register), and some merchants charge a fee for a failed payment. Checks and automatic bill payments may also bounce, which can damage your credit if they're for loans or credit cards.

How to recover from a negative balance

If your account is negative, deposit money as soon as possible — ideally before the bank's important date in their notice. The deposit will first cover the negative balance, then cover any fees the bank has charged. Once your balance is positive again, your account is active and you can use it normally.

If you've already been reported to ChexSystems, you can request a copy of your report and dispute any errors. You can also look for banks that specialize in second-chance checking accounts — these are designed for people with banking problems and have lower fees and lower minimum balances. They won't erase your ChexSystems report, but they will let you open a new account while you're rebuilding your banking history.

To avoid this situation in the future, set up balance alerts with your bank. Most banks let you choose a threshold — for example, $100 — and they'll send you a text or email when your balance drops below it. This gives you a warning before you overdraft. You can also use your bank's mobile app to check your balance before making purchases, or keep a small buffer in your account (money you don't spend) so that small mistakes don't push you negative.

Frequently Asked Questions

Can a bank refuse to let me withdraw money if my account is negative?

Yes. Once your account is overdrawn, the bank can freeze it and prevent new transactions until you deposit money to cover the negative balance. They can also refuse to process checks or automatic payments. However, they cannot prevent you from depositing money or accessing money that's already been deposited.

Will a negative checking account hurt my credit score?

A negative checking account itself does not appear on your credit report and will not directly lower your credit score. However, if the bank sends your debt to a collection agency, that collection account will appear on your credit report and will hurt your score. Additionally, if you have automatic bill payments set up and they bounce because your account is overdrawn, you may miss payments on credit cards or loans, which will damage your credit.

How long does ChexSystems keep a record of my negative account?

ChexSystems typically keeps records for five years. After that time, the negative account will no longer appear on your report, and you should be able to open a new checking account at most banks without difficulty. You can request your ChexSystems report online to see what information is being reported about you.

What's the difference between overdraft fees and NSF fees?

An overdraft fee is charged when the bank covers a transaction and your balance goes negative. An NSF (non-sufficient funds) fee is charged when a transaction is declined because you don't have enough money. If you've opted out of overdraft coverage, you'll pay NSF fees instead of overdraft fees. The amount is usually similar, but the outcome is different: with an overdraft fee, the transaction goes through; with an NSF fee, it doesn't.

Can I negotiate my overdraft fees with the bank?

Yes, especially if this is your first overdraft or if you've been a customer for a long time. Call your bank's customer service and explain the situation. Many banks will reverse one or two overdraft fees as a courtesy, particularly if you bring your account current quickly. It never hurts to ask, but there's no may provide they will agree.