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 account, your bank treats it as a short-term loan. Most banks charge a fee for this — typically $25 to $35 per transaction that pushes you over, though some charge a daily fee instead. The negative balance itself does not disappear. You owe that money to the bank, and it sits there accruing fees until you deposit enough to bring the account back to zero or positive.

What happens next depends on how long you stay negative and whether your bank has an overdraft protection program. Some banks will close your account if you remain overdrawn for 30 to 60 days without depositing funds. Others will send your account to a collections agency if the negative balance is large enough and unpaid long enough. The exact timeline and threshold vary by bank.

Key Takeaways

  • Each transaction that overdrafts your account typically costs $25 to $35, and multiple overdrafts in one day can result in multiple fees.
  • Your bank may refuse to process new transactions once your account reaches a certain negative threshold, usually somewhere between -$100 and -$500.
  • Staying overdrawn for 30 to 60 days without depositing money can trigger account closure, and your bank may report the debt to a collections agency.
  • Overdraft protection — a linked savings account or credit line — can prevent overdraft fees if you have it set up before you go negative.
  • Once your account is closed due to overdraft, you may appear in ChexSystems, a banking history database that makes it harder to open a new account elsewhere.

How overdraft fees stack up in a single day

If you make multiple purchases or withdrawals that overdraft your account on the same day, you can be charged multiple overdraft fees — one per transaction. A person who makes five debit card purchases while $10 in the negative might face five separate $35 fees, totaling $175, even though the original overspend was only $10.

Some banks reorder transactions to maximize fees — processing larger purchases before smaller ones, so more transactions trigger overdrafts. Other banks process transactions in the order they occur. A few banks cap the number of overdraft fees per day, but this is not standard. Check your bank's overdraft policy in the account agreement or online to see how they handle multiple transactions.

When your bank stops letting you spend

Banks set a threshold — a maximum negative balance — beyond which they will not process new transactions. This threshold is usually somewhere between -$100 and -$500, depending on the bank and your account history. Once you hit that limit, your debit card will be declined, checks will bounce, and automatic bill payments may fail.

This is different from the overdraft fee. The fee is what you pay for going over. The threshold is the point at which the bank stops allowing you to go further over. If you are at -$150 and your bank's threshold is -$100, new transactions will be declined even though you have not yet been charged another fee.

Account closure and collections after 30 to 60 days

If your account stays negative for 30 to 60 days without any deposit, most banks will close it. The exact timeline depends on the bank's policy. When they close the account, they may charge a final fee, and they will report the negative balance as a debt owed to them.

If the negative balance is large enough — usually $25 or more, though this varies — the bank may send it to a third-party collections agency. That agency will then attempt to collect the debt from you through phone calls, letters, or legal action. A collections account will appear on your credit report and damage your credit score for up to seven years.

How overdraft protection works if you have it

Overdraft protection is a service that links your checking account to another account — usually a savings account, money market account, or credit line — at the same bank. When a transaction would overdraft your checking account, the bank automatically transfers money from the linked account to cover it.

If you have overdraft protection linked to a savings account, the transfer is usually free or costs a small fee ($1 to $5). If it is linked to a credit line, you pay interest on the borrowed amount. The key difference from a regular overdraft is that the transfer happens automatically, so you avoid the overdraft fee — but you still owe the money you borrowed. You will need to repay it, either by depositing funds or by paying interest if it came from a credit line.

What appears on your credit report and banking history

A single overdraft fee does not appear on your credit report. However, if your account goes to collections, that debt will show up on your credit report as a collections account. It will also appear in ChexSystems, a banking history database that most banks check when you explore for a new account.

Once you are in ChexSystems for an unpaid overdraft, many banks will deny your process for a new checking account. Some banks specialize in second-chance accounts for people with ChexSystems records, but they often charge higher fees and offer fewer features. The ChexSystems record stays for five years from the date of the negative item.

How to recover from an overdrawn account

The fastest way to stop fees is to deposit money to bring your account back to zero or positive. Once the account is positive, no new overdraft fees will be charged. If you have already been charged overdraft fees, you can ask your bank to reverse them — banks sometimes do this once per year or if you have a good history with them, but they are not required to.

If your account has gone to collections, contact the collections agency directly and ask about a settlement. Many agencies will accept a payment less than the full amount owed. Get any settlement agreement in writing before you pay. Once you pay, ask the agency to remove the account from ChexSystems, though they may not agree to do so.

If you want to avoid overdrafts in the future, set up account alerts with your bank. Most banks let you set a low-balance alert — a text or email when your balance drops below a certain amount. Some banks also offer a grace period of a few hours to deposit money before charging the overdraft fee, though this is less common.

Frequently Asked Questions

Can a bank charge me an overdraft fee if I did not authorize overdraft protection?

Yes. Overdraft fees are separate from overdraft protection. Your bank can charge you a fee for overdrafting even if you never signed up for overdraft protection. However, federal rules require banks to get your permission before charging overdraft fees on debit card and ATM transactions — they can still charge fees on checks and automatic payments without permission.

How long does it take for a bank to close my account if I stay negative?

Most banks close accounts after 30 to 60 days of being overdrawn with no deposits. Some banks are faster, closing after two weeks. Check your account agreement or call your bank to find out their specific policy. Once closed, you will not be able to use the account, and the bank will report the debt if it is unpaid.

Will an overdraft hurt my credit score?

A single overdraft fee will not hurt your credit score. However, if the account goes unpaid and is sent to collections, the collections account will appear on your credit report and lower your score. The damage is significant — collections accounts typically lower scores by 50 to 100 points or more, depending on your starting score.

Can I dispute an overdraft fee?

You can ask your bank to reverse the fee, and some banks will do so if you have a good account history or if it is your first overdraft. There is no legal requirement for them to reverse it, but it costs nothing to ask. Call your bank's customer service and explain the situation. 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.

What is the difference between overdraft fees and NSF fees?

An overdraft fee is charged when your bank covers a transaction that would have made your account negative. An NSF (non-sufficient funds) fee is charged when your bank declines a transaction because you do not have enough money. The fee amounts are usually the same, but NSF is charged when the bank says no, while overdraft is charged when the bank says yes and covers it.