Your bank will charge you fees, and the account may be closed
When your savings account balance drops below zero, your bank treats it as a debt you owe them. They will charge you an overdraft fee — usually $25 to $35 per transaction that pushed the account negative, though this varies by bank. Some banks charge an additional daily fee for each day the account stays negative. You are responsible for paying back the negative amount plus all fees.
If you do not deposit money to cover the negative balance within a set time — often 30 to 60 days, depending on your bank's policy — the bank may close your account. Once closed, the bank may report the debt to a collection agency or pursue other collection methods. A closed account also appears on your banking history, which can make it harder to open accounts at other banks in the future.
Key Takeaways
- Each transaction that overdraws your account typically costs $25 to $35 in fees, and some banks charge additional daily fees while the account is negative.
- You must repay the negative balance plus all fees; the bank will not forgive the debt or close the account without giving you time to pay.
- If you do not pay within 30 to 60 days, the bank may close your account and report the debt to a collection agency.
- A closed account for non-payment appears on your banking history and makes it harder to open new accounts elsewhere.
- You can prevent overdrafts by linking a backup account, turning off overdraft protection, or requesting the bank decline transactions that would overdraw you.
How overdraft fees stack up quickly
Overdraft fees are charged per transaction, not per day. If you make five purchases on the same day and each one overdraws your account, you may be charged five separate overdraft fees — one for each transaction. This means a single shopping trip can cost you $125 to $175 in fees alone, on top of the amount you overspent.
Some banks also charge a sustained overdraft fee or extended overdraft fee — an additional charge if your account stays negative for more than a few days. This fee might be $5 to $10 per day. If your account is negative for two weeks, these daily fees can add up to $70 or more, separate from the transaction fees you already owe.
The total amount you owe grows quickly. If you overdraw by $50 and are charged $35 in overdraft fees plus $10 in daily fees over a week, you now owe $95 to bring the account back to zero — nearly double the original overspend.
What "overdraft protection" means and whether to use it
Overdraft protection is a service that prevents your account from going negative by automatically transferring money from another account you own — usually a linked savings account or checking account. If you try to spend $100 but only have $80, the bank transfers $20 from your linked account instead of charging an overdraft fee.
Overdraft protection sounds helpful, but it has a cost. Most banks charge a transfer fee of $1 to $3 each time they move money between your accounts. If you overdraw frequently, these transfer fees add up. You also lose control of when money moves, which can leave your backup account empty when you need it.
Many banks offer overdraft protection by default, but you can turn it off. If you turn it off, transactions that would overdraw your account will straightforward be declined at the point of sale — you will not be able to complete the purchase, but you also will not be charged a fee. For most people new to banking, declining the transaction is safer than paying overdraft fees or transfer fees.
How long you have to pay back a negative balance
Banks do not require you to pay back a negative balance when ready. Most banks give you 30 to 60 days to deposit money and bring the account back to zero. During this time, you may continue to use the account if you deposit funds, though some banks freeze accounts that go negative.
However, the longer your account stays negative, the more fees you accumulate. If your bank charges a $5 daily fee and you wait 30 days to pay, you will owe an additional $150 in fees on top of the original negative amount. Paying as soon as possible keeps the total cost down.
If you do not pay within the bank's grace period, they will close the account. At that point, you owe the full negative balance plus all accumulated fees. The bank may freeze any other accounts you have with them and report the debt to a collection agency, which will attempt to collect the money from you.
How a closed account affects your banking future
When a bank closes your account due to non-payment, they report it to ChexSystems, a banking history database that most banks check before opening new accounts. A closure for overdraft debt stays on your ChexSystems record for five years. During that time, many banks will deny your process for a new account.
Some banks specialize in second-chance accounts for people with ChexSystems records, but these accounts often have higher fees, lower spending limits, or require a deposit to open. You may also have trouble opening accounts at credit unions or online banks, though policies vary.
The debt itself does not disappear after five years. If the bank or a collection agency sues you for the money, they can pursue it beyond the five-year reporting period. Paying the debt, even years later, stops collection efforts and removes the threat of a lawsuit.
Steps to take if your account is already negative
If you discover your account is negative, deposit money as soon as you can — even a partial deposit stops additional daily fees from accumulating. Call your bank and ask them to waive the overdraft fees; some banks will remove one or two fees as a courtesy, especially if you have been a customer for a while and this is your first overdraft.
Ask your bank for their exact policy on how long you have to pay and what happens if you do not. Get the answer in writing if possible. If you cannot pay the full amount when ready, ask whether you can set up a payment plan. Some banks will work with you rather than close the account.
If the account is closed and sent to a collection agency, you can negotiate with the agency to pay a reduced amount. Many agencies will accept 50 to 70 percent of the debt if you pay in a lump sum. Get any agreement in writing before you pay.
How to prevent overdrafts in the future
The simplest way to prevent overdrafts is to check your balance before spending. Many banks offer free balance alerts via text or email — you can set them to notify you when your balance drops below a certain amount, like $50 or $100. This gives you a warning before you accidentally overspend.
If you have trouble tracking spending, ask your bank to decline transactions that would overdraw your account instead of charging a fee. This is sometimes called debit card decline or overdraft opt-out. Your card will straightforward be rejected at checkout, but you will not be charged a fee. This is safer than overdraft protection or overdraft fees.
Keep a small buffer in your account — $50 or $100 — that you do not spend. This cushion prevents accidental overdrafts from small mistakes or unexpected charges. If you have direct deposit from an employer, the buffer is easier to maintain because money flows in regularly.
Frequently Asked Questions
Can the bank take money from my other accounts to cover an overdraft?
Only if you have overdraft protection set up and those accounts are linked to the overdrafted account. If they are not linked, the bank cannot touch them. If you do have linked accounts and do not want the bank to transfer money automatically, you can turn off overdraft protection in your online banking settings or by calling the bank.
Will a negative savings account hurt my credit score?
A negative savings account does not directly appear on your credit report, so it does not lower your credit score. However, if the bank sends the debt to a collection agency and it goes unpaid, the collection account will appear on your credit report and will hurt your score. Paying the debt stops this damage.
What if I cannot pay back the negative balance?
Contact your bank and explain your situation. Some banks will work out a payment plan or remove fees if you are in hardship. If the account is sent to a collection agency, you can negotiate with them directly — many will accept a partial payment. Ignoring the debt does not make it go away and will result in collection calls and potential legal action.
Does overdraft protection prevent my account from going negative?
Yes, overdraft protection transfers money from a linked account before your main account goes negative. However, you pay a transfer fee each time, usually $1 to $3. For most people, it is cheaper to turn off overdraft protection and let transactions be declined instead.
How long does a closed account stay on my banking record?
A closed account for non-payment stays on ChexSystems for five years. After five years, it is removed from the database, but the debt itself does not disappear and can still be collected. Paying the debt before the five years are up can help you open new accounts sooner.