Your bank will charge you a fee, usually $25 to $35, and may decline transactions or cover them temporarily
When you spend more money than you have in your checking account, your balance goes negative. What happens next depends on your bank's overdraft policy. Most banks charge an overdraft fee — a flat charge per transaction that pushes your account further into the red. Some banks also charge a daily fee if your account stays negative for more than a day or two. A few banks will straightforward decline the transaction and charge you a smaller fee for the attempt.
The timing matters. If you overdraft on a Friday, you might not see the fee until Monday, when the bank processes the weekend's transactions. By then, other charges may have stacked up. If your account is still negative after a few days, some banks will close the account and send you to collections — meaning a debt collector will contact you, and the negative mark will appear on your banking history.
The cost adds up fast. One overdraft of $50 can cost you $25 to $35 in fees, making the real cost of that transaction $75 to $85. If multiple transactions hit your account while it is negative, you can be charged once per transaction, not once per day. A single grocery trip that overdrafts your account by $10 can trigger three separate overdraft fees if the store, your bank, and a payment processor each process the charge separately.
Key Takeaways
- Overdraft fees typically range from $25 to $35 per transaction, and you can be charged multiple times in a single day if several transactions post while your account is negative.
- Your bank may cover the overdraft temporarily (allowing the transaction to go through) or decline it outright, depending on whether you have overdraft protection enabled.
- If your account stays negative for more than a few days, your bank may close it and report you to a collections agency, which damages your banking history.
- The fastest way to stop the fees is to deposit money when ready, because banks usually stop charging once your balance is positive again.
- Some banks offer overdraft grace periods or waive the first overdraft fee per year, but you have to ask or check your account agreement to know if yours does.
How overdraft protection works — and what it costs
Overdraft protection is a feature that lets your bank cover a transaction even when you do not have enough money. Instead of declining the charge, the bank pays it and charges you a fee. This sounds helpful, but it is expensive: you are paying $25 to $35 to borrow a small amount of money for a few days.
Overdraft protection is usually tied to a savings account or credit line. If you have it enabled and you overdraft your checking account, the bank transfers money from your savings account to cover the shortfall, then charges you a fee for the transfer — often $10 to $12 per transfer, on top of any overdraft fee. If you do not have a linked savings account, the bank may offer a credit line instead, which works like a small loan: you pay interest on the amount borrowed, plus a fee.
You can turn overdraft protection off in your bank's app or by calling customer service. Once it is off, transactions that would overdraft your account will straightforward be declined. You will still be charged a fee for the declined transaction — usually $25 to $35 — but only once, not repeatedly.
What to do when ready after you overdraft
The first step is to deposit money into your account as soon as you can. Your bank will stop charging overdraft fees once your balance is positive again. If you deposit money on the same day you overdraft, you may be able to stop additional fees from posting. If you wait until the next business day, you will likely be charged at least one more fee.
Check your account balance and recent transactions in your bank's app or online. Look for the overdraft fee itself — it will appear as a charge from your bank, not a merchant. Count how many overdraft fees you have been charged. If you have been charged more than once in a short period, contact your bank and ask whether any fees can be waived. Banks sometimes reverse one overdraft fee per year if you ask, especially if you have been a customer for a long time or if the overdraft was caused by a timing error on the bank's side.
If you cannot deposit money when ready, contact your bank and explain the situation. Some banks will give you a few days before closing your account or reporting you to collections. Do not ignore the negative balance — the longer it sits, the more fees accumulate and the harder it becomes to recover.
When your bank closes your account
If your account stays negative for more than a week or two, your bank may close it without warning. The bank will send you a letter explaining the closure, usually citing "repeated overdrafts" or "failure to maintain a positive balance." Once the account is closed, you cannot use it anymore, and the bank may freeze any remaining funds to cover the overdraft and fees.
A closed account does not automatically hurt your credit score — banks do not report account closures to credit bureaus. However, if your account goes to collections, that will appear on your credit report and damage your score. Collections happens when your bank sells the debt to a third-party collector or refers it to one. The collector will contact you by phone and mail, asking you to pay the full amount owed.
You can still use other banks' accounts after one bank closes yours, but some banks check a system called ChexSystems before opening a new account. If your closed account was reported to ChexSystems, other banks may decline to open an account for you. You can request a copy of your ChexSystems report to see what was reported, and you can dispute inaccurate information.
How to avoid overdrafting in the future
The simplest method is to keep a buffer in your checking account — money you do not spend. Even $100 or $200 cushion prevents most accidental overdrafts. Set a low balance alert in your bank's app so you get a notification when your balance drops below a certain amount, like $200. This gives you time to transfer money in before you overdraft.
Turn off overdraft protection if you do not need it. Without it, transactions will be declined instead of covered, and you will only be charged once per declined transaction instead of repeatedly. A declined transaction is inconvenient, but it costs less than an overdraft fee and stops the problem when ready.
Automate your deposits if you get paid regularly. Set up a direct deposit from your employer, or schedule a transfer from savings to checking on payday. This ensures money hits your account on a predictable schedule, reducing the chance of an accidental overdraft between paychecks.
If you overdraft frequently, consider switching to a bank that does not charge overdraft fees or that offers a grace period. Some online banks and credit unions have no overdraft fees at all. Others charge a flat fee per day instead of per transaction, which costs less if you overdraft multiple times in one day.
Overdraft fees versus declined transaction fees
Banks charge different fees depending on whether they cover the transaction or decline it. An overdraft fee is charged when the bank covers a transaction that would overdraft your account — you are paying for the bank to lend you money temporarily. A declined transaction fee (also called a non-sufficient funds or NSF fee) is charged when the bank declines the transaction because you do not have enough money.
The fees are usually the same amount — $25 to $35 — but the outcome is different. With an overdraft fee, the transaction goes through and your balance goes negative. With a declined fee, the transaction does not go through, your balance stays where it is, and you have to find another way to pay. A declined transaction is often better financially because it stops the problem at one fee instead of letting it cascade.
| Scenario | What Happens | Fee | Your Balance After |
|---|---|---|---|
| Overdraft protection on | Bank covers the transaction | $25–$35 overdraft fee | Negative |
| Overdraft protection off | Bank declines the transaction | $25–$35 declined fee | Unchanged |
| Linked savings account | Bank transfers from savings | $10–$12 transfer fee + overdraft fee | Savings goes down, checking stays positive |
Frequently Asked Questions
Can I get an overdraft fee reversed?
Many banks will reverse one overdraft fee per year if you ask, especially if you have a good history with the bank or if the overdraft was caused by a timing error. Call your bank's customer service line and explain the situation. Be polite and specific — mention the date and amount. If they decline, ask whether they have a hardship program or a one-time courtesy reversal.
How long does it take for overdraft fees to post?
Overdraft fees usually post within one to three business days, depending on when the transaction clears. Weekend and holiday transactions may take longer to process. Check your account daily while you are negative so you know how many fees have been charged and can deposit money to stop additional ones.
Will overdrafting hurt my credit score?
An overdraft alone does not hurt your credit score because banks do not report it to credit bureaus. However, if your account goes to collections, that will appear on your credit report and lower your score. Paying off a negative balance before it reaches collections protects your credit.
What is the difference between overdraft and a bounced check?
A bounced check is a check that the bank declines to cash because you do not have enough money. You are charged a fee for the bounced check, and the person or business you wrote it to is also charged a fee by their bank. An overdraft is when the bank covers a transaction (usually a debit card purchase or ACH transfer) and charges you a fee. Bounced checks are more damaging because they affect the other person too.
Can I overdraft my account on purpose to get a short-term loan?
You can, but it is expensive. A $25 overdraft fee to borrow $50 for three days costs you 50% of the amount borrowed. A payday loan or credit card cash advance is usually cheaper. If you need money urgently, contact your bank about a personal line of credit or overdraft protection tied to a savings account, both of which cost less than repeated overdraft fees.