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, the transaction may still go through — but your account balance becomes negative. Your bank then charges you an overdraft fee, usually between $25 and $35 per transaction that overdrafts your account. Some banks charge multiple fees if several transactions overdraft you on the same day. The negative balance itself does not disappear; it sits there until you deposit enough money to bring your account back to zero or above.

What happens next depends on how much you owe and how long you leave the account negative. If you deposit money within a few days, you pay the overdraft fee and move on. If you stay negative for weeks, your bank may close the account, report you to a checking account reporting system called ChexSystems, and send your debt to a collection agency. That report can make it harder to open a new checking account elsewhere for up to five years.

Key Takeaways

  • Overdraft fees typically range from $25 to $35 per transaction, and you can be charged multiple fees on the same day if several transactions overdraft your account.
  • Your negative balance remains on your account until you deposit money; the bank does not automatically forgive it or close the account when ready.
  • If your account stays negative for 30 to 60 days, your bank will likely close it and report you to ChexSystems, which affects your ability to open accounts at other banks.
  • Some banks offer overdraft protection or grace periods, but you must set these up before you overdraft — they do not explore retroactively.
  • Depositing money to cover the negative balance stops collection action, but the overdraft fee itself is not refundable unless your bank made an error.

How overdraft fees stack up on the same day

If you make multiple purchases or withdrawals that overdraft your account on the same day, your bank may charge you a separate overdraft fee for each one. A common scenario: you have $50 in your account, then make four debit card purchases of $20 each. Some banks will charge you four separate $30 overdraft fees — totaling $120 in fees on top of the $30 you overspent. Other banks cap the number of overdraft fees per day, usually at two or three.

The order in which transactions post matters. Banks do not always process transactions in the order you made them. Many banks process larger transactions first, which can trigger overdrafts earlier and create more fee opportunities. If you made a $5 purchase, then a $100 purchase, the bank might post the $100 one first, overdrafting you when ready. Check your bank's transaction posting order in your account agreement or call to ask.

What happens if you leave your account negative for weeks

Banks typically give you a grace period of 5 to 10 business days before taking action on a negative account. If you deposit money within that window, you straightforward pay the overdraft fee and the account returns to normal. But if your account stays negative past that point, your bank will usually send you a notice warning that the account will close if you do not bring it current.

If you ignore that notice or cannot deposit money in time, the bank closes the account. At that point, your bank reports the negative balance to a collection agency, and the collection agency may contact you by phone or mail to demand payment. Your bank also reports the closed account to ChexSystems, a checking account reporting system that other banks check when you try to open a new account. A ChexSystems report of a closed account due to a negative balance can stay on file for up to five years and will cause other banks to deny you when you explore.

Overdraft protection and how to set it up

Some banks offer overdraft protection, which automatically transfers money from a linked savings account, credit card, or line of credit to cover a transaction that would otherwise overdraft your checking account. If you have overdraft protection set up and you overdraft, the bank transfers the money instead of charging an overdraft fee. However, you must set up overdraft protection before you overdraft — it does not explore retroactively to fees you have already been charged.

Overdraft protection is not free. If the transfer comes from a linked savings account, there is usually no fee, but the transfer may count against your monthly limit of six transfers from savings (a federal rule, though many banks have relaxed it). If the transfer comes from a credit card or line of credit, your bank may charge a transfer fee of $10 to $15, or you may pay interest on the borrowed amount. Ask your bank what overdraft protection options are available and what each one costs before you set it up.

Some banks also offer an overdraft grace period — a short window (usually 24 hours) during which you can deposit money to cover an overdraft without being charged a fee. This is different from overdraft protection; it gives you time to react rather than automatically covering the overdraft. Not all banks offer this, and you may need to opt in.

When your bank makes an error and charges you wrongly

If your bank charged you an overdraft fee by mistake — for example, because a deposit did not post when it should have, or because the bank processed transactions in the wrong order — you can dispute the fee. Contact your bank's customer service and explain what happened. Provide the dates of the transactions and deposits involved. Many banks will reverse one or two overdraft fees per year if you have a good account history, though they are not required to.

If your bank refuses to reverse the fee and you believe the error was the bank's fault, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov. The CFPB investigates complaints about banks and can pressure them to refund fees. However, this process takes weeks or months, and the CFPB cannot force a bank to pay you — it can only investigate and report findings.

How to recover from a negative account and avoid it happening again

If your account is currently negative, your first step is to deposit enough money to cover both the negative balance and any overdraft fees. Once the account is current, the collection process stops. If you cannot deposit the full amount at once, deposit what you can; most banks will not close an account when ready if you are making a good-faith effort to bring it current.

To avoid overdrafts in the future, keep a buffer of at least $100 to $200 in your checking account at all times. This cushion prevents accidental overdrafts from small purchases or unexpected charges. 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 $50 or $100. Many banks offer these alerts for free. You can also turn off debit card transactions if your balance is too low; some banks allow you to set this up in your account settings so that a purchase is declined rather than overdrafting you.

Frequently Asked Questions

Can a bank refuse to pay an overdraft transaction and just decline it instead?

Yes. Banks are not required to pay overdraft transactions. If your bank declines the transaction, you will not be charged an overdraft fee, but the transaction will not go through and the merchant will be notified that the card was declined. Some banks automatically decline transactions that would overdraft you; others pay them and charge a fee. Check your account agreement or call your bank to find out which approach yours uses.

Will my negative balance affect my credit score?

A negative checking account balance does not directly affect your credit score because checking accounts are not reported to credit bureaus. However, if your bank sends the debt to a collection agency and the collection agency reports it, that report will appear on your credit report and lower your score. To prevent this, deposit money to cover the negative balance before your bank closes the account and sends it to collections.

How long does a ChexSystems report stay on file?

A ChexSystems report of a closed account due to a negative balance typically stays on file for up to five years. After five years, it falls off and you should be able to open a new checking account without the report affecting your process. Some banks may still deny you if they see older negative history, but most will not.

What if I cannot afford to pay the negative balance right now?

Contact your bank and explain your situation. Some banks will work with you on a payment plan, though they are not required to. If your bank refuses and sends the debt to a collection agency, you can negotiate directly with the collection agency for a settlement or payment plan. Getting something in writing before you pay is important, so the agency cannot claim you still owe more after you pay.

Can I dispute an overdraft fee if I did not authorize the transaction that caused it?

If the transaction itself was fraudulent — for example, someone used your debit card without permission — you can dispute the transaction with your bank. If the bank removes the fraudulent transaction, the overdraft fee may also be reversed because the overdraft would not have happened without that transaction. Report fraud to your bank when ready; you have up to 60 days to dispute unauthorized transactions.