Yes, your checking account can go negative, and your bank will charge you for it
A negative balance means you have spent more money than you had in your account. Your bank will let the transaction go through—this is called overdraft coverage—but then charge you a fee, usually between $25 and $35 per overdraft. Some banks charge multiple fees in a single day if several transactions post while your account is negative. The negative balance itself is not illegal, but the fees add up fast, and your account stays negative until you deposit enough money to cover both the original overspend and the fees.
Not all banks handle this the same way. Some will decline the transaction instead of allowing the overdraft, which stops the negative balance from happening at all. Others automatically enroll you in overdraft coverage when you open an account. A few banks offer a grace period—usually one business day—where you can deposit money before they charge the fee. The key difference is whether your bank has opted you into overdraft coverage by default or requires you to turn it on yourself.
Key Takeaways
- Your bank can allow your account to go negative and charge you $25 to $35 per overdraft transaction, or it can decline the transaction and prevent the negative balance.
- Overdraft coverage is often turned on automatically when you open a checking account, but you can call your bank to turn it off.
- Multiple transactions can trigger multiple overdraft fees on the same day, even if the total overspend is small.
- Some banks offer a courtesy grace period of one business day to deposit money before charging the fee, but this is not standard.
- Turning off overdraft coverage means transactions will be declined rather than charged a fee, but you lose the ability to overdraw in emergencies.
How overdraft fees work and when they stack up
When your account balance drops below zero, your bank charges an overdraft fee for each transaction that caused the negative balance. If you have $50 in your account and make three $30 purchases in one day, all three will post, and you will owe three overdraft fees—not one. This happens because each transaction is processed separately, and each one triggers the fee independently. By the end of the day, you could owe $90 in fees on top of the $40 you actually overspent.
The timing of when transactions post matters. Debit card purchases often post when ready, but checks and ACH transfers (like bill payments) can take one to three business days. This means you might think you have enough money when you actually do not, because pending transactions have not yet reduced your balance. Some banks show pending transactions in your available balance, but others do not—you have to check your actual balance, not your available balance, to know the real number.
A few banks have started offering overdraft grace periods, usually 24 hours, where you can deposit money before the fee is charged. Chase, for example, allows one business day to bring your account positive. But this is not standard across the industry, and many banks charge the fee when ready. Always ask your bank whether they offer a grace period and how long it lasts.
Opting out of overdraft coverage to avoid fees
You can call your bank and ask them to turn off overdraft coverage. Once it is off, transactions will be declined if you do not have enough money in your account. You will not be charged a fee, but the transaction will not go through—your debit card will be rejected at the register, or your check will bounce. This prevents the negative balance from happening in the first place.
Turning off overdraft coverage is the safest way to avoid overdraft fees, but it comes with a trade-off: you lose the ability to overdraw in an emergency. If you are at the grocery store and your card is declined, you cannot complete the purchase. Some people prefer this because it forces them to stay within their actual balance. Others prefer overdraft coverage because it gives them a safety net, even though it costs money.
To turn off overdraft coverage, call your bank's customer service number on the back of your debit card or log into your online banking portal. Look for a setting called "overdraft protection" or "overdraft coverage" and disable it. Some banks require you to do this in writing or in person, but most allow it over the phone. Ask for confirmation in writing so you have proof that you requested it.
What happens to a negative balance if you do not pay it
If your account stays negative and you do not deposit money to cover it, your bank will eventually close the account. The timeline varies—some banks close accounts after 30 days of negative balance, others after 60 or 90 days. Before they close it, they will try to collect the money by charging additional fees or sending you notices. Once the account is closed, the bank may report the negative balance to ChexSystems, a banking history database that other banks use to decide whether to open accounts for you.
A negative balance reported to ChexSystems can make it hard to open a new checking account at other banks for up to five years. Banks see the negative balance as a sign that you mismanaged the account, and they use this information to screen new applicants. You can still open accounts at some banks—credit unions and online banks are often more lenient—but mainstream banks may decline you.
If you have a negative balance that you cannot pay, contact your bank and ask about a payment plan. Some banks will work with you to set up a schedule to pay back the overdraft and fees over time, especially if the negative balance is recent. The sooner you contact them, the better your chances of avoiding account closure and a ChexSystems report.
The difference between overdraft coverage and overdraft protection
These terms are often used interchangeably, but they mean slightly different things. Overdraft coverage is when your bank allows the transaction to go through and charges you a fee. Overdraft protection usually refers to a linked savings account or credit line that your bank automatically draws from to cover the shortfall, preventing the negative balance and the fee. If you have overdraft protection set up, your bank will transfer money from your savings account to your checking account to cover the overspend, and you may be charged a small transfer fee instead of a large overdraft fee.
Overdraft protection is less common now than it used to be, but it is still available at some banks. If you have a savings account at the same bank, ask whether they offer overdraft protection. It is usually cheaper than overdraft coverage fees, but it only works if you have money in the linked account. If both accounts are empty, overdraft protection will not help, and you will still be charged an overdraft fee.
Overdraft fees and your credit score
An overdraft fee itself does not directly damage your credit score. Credit bureaus do not see overdraft fees—they only see credit accounts like credit cards, loans, and lines of credit. However, if your negative balance goes unpaid and your bank sends it to a debt collector, that collection account will appear on your credit report and lower your score significantly.
The path from overdraft to credit damage usually takes months. First, your bank charges the overdraft fee. Then, if you do not pay it, they charge additional fees and send you notices. After 30 to 60 days of non-payment, they may close your account and report the debt to a collection agency. Once it is with a collector, it shows up on your credit report as a collection account, which stays on your report for seven years.
To avoid this, pay any overdraft balance as soon as you can. Even if you cannot pay the full amount when ready, depositing something shows the bank you are trying to resolve it. If you are struggling to pay, contact the bank before they close the account and ask about a payment arrangement.
Banks that charge the fewest overdraft fees
Some banks have reduced or eliminated overdraft fees in recent years. Charles Schwab, Ally Bank, and LendingClub do not charge overdraft fees at all—if you overdraw, the transaction is straightforward declined. Chime and SoFi offer accounts with no overdraft fees and no minimum balance requirements. Traditional banks like Bank of America and Wells Fargo still charge overdraft fees, but they have reduced the number of fees you can be charged per day and added grace periods.
If overdraft fees are a recurring problem for you, switching to a bank that does not charge them can save you hundreds of dollars per year. Online banks and credit unions tend to have lower or no overdraft fees because they have lower overhead costs. Before you switch, check whether the new bank offers the features you need—some no-fee banks have limited branch access or do not offer certain services like cashier's checks.
Frequently Asked Questions
Can a bank refuse to let my account go negative?
Yes. If you turn off overdraft coverage, your bank will decline transactions that would make your account negative. You can request this by calling customer service. Once it is off, your debit card will be rejected if you do not have enough money, but you will not be charged an overdraft fee.
How long does a negative balance stay on my record?
A negative balance itself does not stay on your credit report. However, if it goes unpaid and is sent to a collection agency, the collection account stays on your report for seven years. The negative balance itself is reported to ChexSystems for up to five years, which affects your ability to open new bank accounts.
What if I dispute an overdraft fee?
You can call your bank and ask them to reverse the fee, especially if it is your first overdraft or if the fee was caused by a bank error. Banks often reverse one or two fees per year as a courtesy, but they are not required to. Be polite and explain the situation—some banks will remove the fee without argument, while others will decline.
Does overdraft coverage help my credit score?
No. Overdraft coverage does not appear on your credit report at all, so it does not help or hurt your score. Only unpaid overdrafts that are sent to collections damage your credit. Paying the overdraft fee and balance promptly keeps it off your credit report entirely.
Can I have a negative balance on a savings account?
Yes, but it is less common. Savings accounts can go negative the same way checking accounts do, and banks charge overdraft fees. However, many banks do not allow overdraft coverage on savings accounts—they will straightforward decline the transaction. Check with your bank about their policy on savings account overdrafts.