Your bank will charge you an overdraft fee, usually $25 to $35 per transaction that pushes you below zero, and the negative balance will keep growing until you deposit money or the bank closes the account.

When your account balance drops below zero, you have crossed into overdraft territory. The bank has covered the transaction for you—paid the merchant or the person you sent money to—but now you owe the bank that money back, plus a fee. That fee is not a one-time charge. Each transaction that occurs while your account is negative typically triggers another fee, which means a single shopping trip or a few small purchases can rack up $50, $75, or more in charges within hours.

The timeline matters. Most banks process transactions in batches, usually overnight. If you make multiple purchases throughout the day while your account is negative, you may be charged multiple overdraft fees on the same day. Some banks charge one fee per day regardless of how many transactions occur; others charge per transaction. Your account agreement spells out which method your bank uses, though most large banks charge per transaction.

Key Takeaways

  • Overdraft fees typically range from $25 to $35 per transaction, and multiple transactions in one day can result in multiple fees.
  • Your negative balance accrues interest or additional fees the longer it remains unpaid, so the total amount you owe grows quickly.
  • Banks can freeze or close your account if the negative balance persists for 30 to 60 days, depending on the bank's policy.
  • Unpaid overdrafts are reported to ChexSystems, a banking history database, which can prevent you from opening accounts at other banks for up to five years.
  • Paying the negative balance when ready stops the fee cycle, but you may need to contact the bank to request fee reversals if the overdraft was caused by a processing error or bank mistake.

How overdraft fees compound and what you actually owe

The fee itself is only the beginning. If your account stays negative, the bank may charge daily fees or interest on the negative balance. Some banks charge a daily maintenance fee of $5 to $10 for each day the account remains overdrawn. Others charge interest at a rate that can exceed 20% annually, calculated on the negative balance. This means a $50 overdraft can cost you $60 or $70 by the time you deposit money to cover it.

The order in which the bank processes transactions also affects how many fees you pay. Banks typically process transactions in a specific order—often largest to smallest, or in the order they were authorized—rather than the order you made them. This practice, called transaction reordering, can cause more transactions to overdraft than would have if they were processed in the order you made them. For example, if you have $100 in your account and make a $30 purchase, a $50 purchase, and a $40 purchase, the bank might process the $50 first, then the $40, then the $30. The $50 and $40 both overdraft, but the $30 might not—depending on whether the bank has already charged fees. This is why your account can spiral quickly.

When the bank closes your account

If your account remains negative for 30 to 60 days without any deposit, most banks will close the account. The exact timeline depends on your bank's policy. When the bank closes the account, you still owe the negative balance plus all accumulated fees. The bank may send the debt to a collection agency if you do not pay within a certain period, typically 60 to 90 days after closure.

A closed account due to overdraft is reported to ChexSystems, a banking database that tracks account closures and unpaid overdrafts. This report stays on your record for up to five years and makes it difficult or impossible to open a checking or savings account at another bank during that time. Some banks will not open an account for you if you have an active ChexSystems record; others will open an account only if you pay the outstanding balance first.

How unpaid overdrafts affect your credit and financial history

An unpaid overdraft does not directly damage your credit score the way a missed credit card payment does, because overdrafts are not reported to the three major credit bureaus (Equifax, Experian, TransUnion). However, if the bank sends the debt to a collection agency, the collection account will appear on your credit report and will significantly lower your score.

The ChexSystems record is separate from your credit report but equally damaging to your ability to access banking services. When you try to open a new account, the bank runs a ChexSystems check. If your name appears with an unpaid overdraft, the bank will likely deny your process. Some banks offer second-chance checking accounts that do not require a ChexSystems check, but these accounts often come with higher fees, lower limits on debit card transactions, and restrictions on the number of withdrawals you can make per month.

Steps to take if your account is negative

The first step is to deposit money when ready to bring your account back to zero or above. This stops the fee cycle. Even a small deposit—$25 or $50—will prevent additional fees from accruing while you work on paying the full amount. Contact your bank by phone or through your online account to confirm the current balance and the total fees charged.

Next, ask the bank to reverse or waive the overdraft fees. Banks have discretion to reverse fees, especially if this is your first overdraft or if the overdraft was caused by a bank error. Be honest about what happened. If you made a mistake, say so. If a delayed deposit or a processing error caused the problem, explain that. Banks are more likely to reverse fees for customers with a long history of on-time account management than for customers with repeated overdrafts. Even if the bank will not reverse all the fees, they may reverse some of them.

If you cannot deposit the full amount when ready, contact the bank and ask about a payment plan. Some banks will work with you to set up a schedule for repaying the negative balance, though this is not may provide. The sooner you pay, the fewer additional fees will accrue.

Preventing overdrafts and understanding your options

Most banks offer overdraft protection, which links your checking account to a savings account or credit line. If a transaction would overdraft your checking account, the bank automatically transfers money from the linked account to cover it. This prevents the overdraft fee, though the transfer itself may cost $1 to $3, or the linked credit line may charge interest. Overdraft protection is optional; you must enroll in it through your bank.

Another option is to turn off overdraft coverage entirely. If you do this, transactions that would overdraft your account will straightforward be declined at the point of sale. You will not be charged a fee, but the transaction will not go through. This prevents the spiral of fees but means your debit card may be declined when you try to make a purchase. Some people prefer this because it forces them to stay within their actual balance.

You can also set up account alerts through your bank's app or website. Most banks allow you to set a low-balance alert that notifies you when your account drops below a certain amount, such as $100 or $50. This gives you time to deposit money before you overdraft.

What to do if the overdraft was caused by a bank error

If you believe the overdraft was caused by the bank—for example, a delayed deposit posting, a duplicate charge, or a transaction processed twice—contact the bank when ready and request an investigation. Explain what happened and provide any documentation you have, such as deposit receipts, screenshots of your account, or emails confirming a transfer. The bank has a process for disputing transactions and investigating errors, though it may take 10 to 30 days.

If the investigation confirms the bank made an error, the bank must reverse the overdraft and all associated fees. If the investigation does not find an error, the bank will deny your dispute, but you can still ask a manager to review the decision or request a fee reversal based on your account history.

Frequently Asked Questions

Can I be arrested for having a negative bank account?

No. Overdrafts are civil matters, not criminal ones. The bank cannot have you arrested for owing money on an overdrawn account. However, if you write a check knowing you do not have sufficient funds and do so repeatedly or with intent to defraud, that is a different matter and could result in criminal charges for bad checks. This is rare and requires proof of intent.

Will my bank account be closed when ready if I go negative?

No. Banks typically allow accounts to remain open while negative for 30 to 60 days. During this time, you can deposit money to bring the account current. If you do not deposit anything within that window, the bank will close the account and may send the debt to a collection agency.

What is the difference between overdraft fees and NSF fees?

NSF stands for non-sufficient funds. An NSF fee is charged when a transaction is declined because you do not have enough money. An overdraft fee is charged when the bank covers the transaction anyway, allowing your account to go negative. The fee amounts are similar, but the outcome is different: NSF means the transaction did not go through; overdraft means it did, and you now owe the bank.

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

Yes, but the process depends on whether the underlying transaction was fraudulent. If someone used your debit card without permission, dispute the transaction itself through your bank's fraud department. Once the transaction is reversed, the overdraft fee should be reversed as well. If the transaction was authorized but you believe the fee itself is unfair, you can request a fee reversal, though the bank is not required to grant it.

How long does a ChexSystems record stay on file?

ChexSystems records typically remain for five years from the date of the account closure or the last activity on the account. After five years, the record is removed and no longer visible to banks. You can request a copy of your ChexSystems report at any time to verify what information is on file.