Your bank will charge you a fee, and the transaction may still go through

When you spend more money than you have in your account, your bank charges an overdraft fee — typically $25 to $35 per transaction, though some banks charge more. The transaction usually goes through anyway, putting your account into negative balance. You now owe the bank not just the amount you overspent, but also the fee on top of it.

What happens next depends on your bank's specific policies and how far negative your account goes. Some banks will let your account stay negative for a few days while you deposit money to cover it. Others will freeze your account or close it if the negative balance persists. The longer your account stays negative, the more fees can stack up — some banks charge daily fees for accounts in overdraft, not just a one-time charge.

The key difference from a declined transaction is that overdraft lets the purchase happen first, then charges you for it. This is why overdraft fees are so common: you may not realize you've overspent until the fee appears on your statement days later.

Key Takeaways

  • Overdraft fees range from $25 to $35 per transaction at most banks, and multiple overdrafts in one day can result in multiple fees.
  • Your bank may charge daily fees while your account stays negative, adding to the total cost beyond the initial overdraft fee.
  • Some banks offer overdraft protection, which transfers money from a linked savings account or credit line to cover the shortfall instead of charging a fee.
  • If your account stays negative for 30 to 60 days without payment, your bank may close the account and report you to ChexSystems, making it harder to open accounts elsewhere.
  • You can ask your bank to reverse one or two overdraft fees if this is your first time, though they are not required to do so.

How overdraft fees add up quickly

Overdraft fees compound fast because banks often charge one fee per transaction, not one fee per day. If you make five purchases when your account is empty, you could face five separate overdraft fees — potentially $125 to $175 in charges from a single day of spending.

Some banks also charge a daily fee while your account remains negative, usually $5 to $10 per day. If your account stays $50 in the red for five days, you could pay the initial overdraft fee plus five daily fees on top of it. By the time you deposit money to cover the original $50, you may have paid $75 or more in fees.

Banks often process transactions in a specific order to maximize fees — they may clear larger purchases first, which causes more smaller purchases to overdraft. This practice is legal, but it means the order you made purchases is not the order they clear, and you cannot predict exactly how many fees you will face.

What overdraft protection is and whether it helps

Overdraft protection is a service that automatically covers overdrafts using money from another account you own — usually a linked savings account or money market account. Instead of paying a $35 overdraft fee, you pay a smaller transfer fee (often $0 to $10) and the money moves from savings to checking to cover the shortfall.

Overdraft protection can save you money if you overdraft occasionally, but it has a real cost: it trains you to spend money you do not have. If your savings account is meant for emergencies, using it to cover everyday overspending depletes that cushion. You also still pay a transfer fee each time, so the savings are not as large as they appear.

Some banks offer overdraft protection through a credit line instead of a savings account. This works similarly — the bank lends you the money to cover the overdraft — but you pay interest on the borrowed amount, not just a flat fee. This is usually more expensive than a savings account transfer.

You can turn overdraft protection on or off in your bank's app or by calling customer service. If you do not have overdraft protection and do not want it, you can ask your bank to decline transactions that would overdraft instead of charging a fee. This prevents the purchase from going through, but it also means your card will be declined at the register.

How long you have to fix a negative balance

Banks typically give you 5 to 10 business days to bring your account back to zero before they take further action. During this time, you can deposit money to cover the overdraft and any fees. If you deposit enough to cover the original overspend but not the fees, most banks will still consider the account resolved — the fees stay charged, but the account is no longer negative.

If your account stays negative for 30 days or longer, your bank may close the account without warning. Once closed, the bank may send your account to a collection agency if the negative balance is large enough. You will also be reported to ChexSystems, a banking history database that other banks check when you try to open a new account. A ChexSystems report can make it difficult to open a checking account elsewhere for up to five years.

Some banks will work with you if you contact them before your account hits 30 days negative. Explain what happened and ask if they will waive the fees or give you more time to deposit money. Banks are not required to do this, but many will if you have been a customer for a while and this is your first overdraft.

Asking your bank to reverse overdraft fees

You can request that your bank reverse overdraft fees, especially if this is your first time or if the overdraft was caused by a bank error. Call the customer service number on the back of your card and ask to speak with someone in the disputes or resolution department. Be direct: explain what happened and ask them to remove the fee.

Banks reverse fees more often than people realize, but they are more likely to do it if you have a good history with them and if you act quickly — within a few days of the fee appearing. If you have had multiple overdrafts in the past year, your chances of a reversal are lower. If you have never asked before, you have a reasonable chance of getting at least one fee removed.

Do not expect the bank to reverse fees automatically or to offer without you asking. You have to make the request yourself. If the first person you speak with says no, ask to speak with a supervisor — different people have different authority to reverse fees.

Overdraft versus declined transactions

When you overdraft, the transaction goes through and you pay a fee. When a transaction is declined, it does not go through and you pay nothing. The difference matters most at the register: a declined card is embarrassing in the moment, but it costs you nothing. An overdraft is invisible in the moment but costs you $25 to $35 later.

If you do not have overdraft protection, you can ask your bank to switch you to "opt-out" mode, which declines transactions instead of overdrafting. This prevents fees but means your card will sometimes not work. Some people prefer this because they know when ready when they are out of money, rather than discovering it days later on their statement.

If you have overdraft protection, transactions will go through using your linked account or credit line instead of being declined. You still pay a fee, but it is usually smaller than a standard overdraft fee.

Rebuilding after overdraft damage

If your account was closed and reported to ChexSystems, you will need to wait before opening a new account at a traditional bank. In the meantime, you can use a second-chance checking account, which is designed for people with banking history problems. These accounts have higher fees and lower limits, but they do not require ChexSystems approval. After 6 to 12 months of clean history with a second-chance account, you can usually move to a regular checking account.

If you still owe money on the closed account, pay it off as soon as you can. Once paid, ask the bank in writing to remove the ChexSystems report. Banks are not required to do this, but some will if enough time has passed and the debt is settled. Even if the report stays, it will age off ChexSystems after five years.

To prevent overdrafts going forward, set up account alerts through your bank's app. Most banks let you set a low-balance alert that texts or emails you when your account drops below a certain amount — $100, $50, or whatever makes sense for you. This gives you a chance to stop spending before you overdraft.

Frequently Asked Questions

Can a bank close my account for overdrafting?

Yes, if your account stays negative for 30 to 60 days, your bank can close it without notice. Once closed, you may be reported to ChexSystems, which makes opening a new account elsewhere difficult for several years. Paying off the negative balance quickly reduces the chance of closure.

Will overdraft fees show up on my credit report?

Overdraft fees themselves do not appear on your credit report. However, if your account goes to collections because you did not pay the negative balance, that collection account will appear on your credit report and damage your score. Overdraft activity also appears in ChexSystems, a separate banking database that affects your ability to open accounts.

What if I overdraft because my employer's direct deposit was late?

Contact your bank and explain the situation. If the overdraft was caused by a timing issue with your deposit, banks are often willing to reverse the fee. Have your pay stub or deposit confirmation ready to show when the money was supposed to arrive.

Can I dispute an overdraft fee like I would dispute a fraudulent charge?

Overdraft fees are not fraudulent charges, so you cannot dispute them through the standard chargeback process. Your only option is to call the bank and request a reversal. If they refuse, you can file a complaint with the Consumer Financial Protection Bureau, though this does not may provide the fee will be reversed.

Do overdraft fees affect my credit score?

Overdraft fees alone do not affect your credit score. Only collection accounts and negative items reported to the credit bureaus affect your score. However, if overdrafts lead to a closed account and collection activity, that will damage your score significantly.