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- A bank charges an overdraft fee when you make a purchase that puts your balance below zero.
- If you get overdraft protection, the bank will automatically transfer funds from savings to checking.
- Overdraft protection is free with some banks, while others charge a fee.
Many top banks have eliminated or reduced overdraft fees significantly in the last few years. That said, many national banks still currently charge significant overdraft fees.
The Consumer Financial Protection Bureau has proposed a rule to limit overdraft fees and protect consumers. The proposal includes setting a benchmark fee, which could be as low as $3, $6, $7, or $14. If adopted, the rule could take effect in October 2025.
What is an overdraft fee?
An overdraft fee is a common bank fee; it occurs when you have a negative account balance.
You can overdraw from your account when you make a debit card transaction or ATM withdrawal and you don't have enough money in your account to cover it.
An overdraft fee can cost anywhere from $0 to $40. Some banks may charge multiple times on the same day, as well as an extended overdraft fee if your balance isn't restored in a few days.
How much banks charge for overdraft fees
| Bank | Overdraft fee | Max charges per day | Fee for using overdraft protection |
| Alliant Credit Union | None | N/A | None |
| Ally | None | N/A | None |
| Associated Bank | $32 | 2 | None |
| Axos Bank | None | N/A | None |
| Bank of America | $10 | 2 | None |
| Betterment | None | N/A | None |
| Capital One 360 | None | N/A | None |
| Charles Schwab | None | N/A | None |
| Chase | $34 | 3 | None |
| Chime | None | N/A | None |
| CIT Bank | None | N/A | None |
| Citi | None | N/A | None |
| Citizens Bank | $35 | 5 | $0 to $12 |
| Comerica | Up to $34 | 2 | None |
| Connexus Credit Union | $4 | 2 | None |
| Consumers Credit Union | $30 | N/A | None |
| Discover | None | N/A | None |
| Fifth Third Bank | $37 | 3 | $12 |
| HSBC | None | N/A | None |
| Huntington Bank | $15 | 3 | None |
| LendingClub | None | N/A | None |
| M&T Bank | Up to $15 | 1 | Up to $8 |
| Navy Federal Credit Union | $20 | 1 | None |
| NBKC Bank | None | N/A | None |
| Pentagon Federal Credit Union | $30 | 1 | None |
| PNC Bank | $36 | 1 | None |
| Regions | $36 | 3 | None |
| Santander | $15 | 3 | None |
| TD Bank | $35 | 3 | None |
| EverBank (TIAA) | None | N/A | None |
| Truist | None | N/A | None |
| USAA | $29 | 1 | None |
| U.S. Bank | $36 | 4 | Up to $12.50 |
| Varo | None | N/A | None |
| Wealthfront | None | N/A | None |
| Wells Fargo | $35 | 3 | None |
How overdraft fees work
Many banks have a limit — usually between $5 and $50 — on how much money you can overdraw from your checking account before overdraft fees are charged.
Financial institutions have different policies and ways of waiving overdraft fees. Generally, you should look for overdraft fees, non-sufficient funds fees, overdraft protection transfer fees, and extended overdraft fees when you're opening a bank account.
Types of overdraft fees
Here's an overview of the four main types of overdraft fees banks charge:
- Overdraft fee: A bank charges an overdraft fee if a purchase would overdraw your account, and the bank covers your overdraft so the transaction goes through. This is typically the process when you swipe your debit card but don't have enough money in your checking account to cover the purchase.
- Non-sufficient funds fee: You'll pay a non-sufficient funds fee if a purchase would overdraw your account, and the bank denies your transaction. A bank charges a non-sufficient funds fee when a check bounces or you don't have enough money in your account to cover an automatic payment.
- Overdraft protection transfer fee: If you have overdraft protection, some banks may charge a fee for utilizing it. You'll pay an overdraft protection transfer fee for making the transfer from another bank account to cover an overdraft or get a line of credit.
- Extended overdraft fee: Some banks have additional overdraft fee consequences. You'll pay an extended overdraft fee at some banks if your account has a negative balance for a certain number of days.
How to avoid overdraft fees
There are several ways of avoiding overdraft charges, either by preparing beforehand or by cleaning up the mess afterward.
Compare bank overdraft policies
Some banks automatically enroll you in overdraft protection, but most institutions make you contact customer service to enroll. The main type of overdraft protection is a bank account transfer.
You can enroll in an overdraft protection transfer if you have an additional account with the company. For example, you could request that your checking account be linked to your savings account so money will automatically transfer to cover your transaction.
Some banks provide this service for free. Others charge a transfer fee, which is typically less than a regular overdraft fee.
Another common type of overdraft protection is an overdraft line of credit. Apply for a line of credit, and the bank will approve you for a loan you can withdraw from whenever necessary.
You'll pay interest on the amount you borrow. The amount you can access and the interest rate will likely depend on your financial profile, including your credit score and income.
Opt out of automatic overdrafts
When you're opening a new bank account, you can request to opt out of automatic overdrafts.
By opting out of automatic overdrafts, you won't have to deal with overdraws. However, this also means that banks could deny debit card transactions or withdrawals if you don't have enough money in your bank account to have a positive balance.
Bank online
It's easier to check your balance if you can quickly log in to online banking from your computer or mobile app, rather than visit a bank or ATM to check your account balance. If you monitor how much money you have, you can stop yourself from overspending.
Set up balance alerts
Some banks will send you a text message or email once your balance hits a certain dollar amount to let you know you're close to overdrawing. You usually have to enroll in this service, so check your online account to sign up.
Ask the bank to waive your fee
You might be able to get out of an overdraft fee if you speak with a customer service representative.
Certain banks will forgive your overdraft if this is your first offense, or if you've been banking there for a long time. Others may offer a grace period of 24 hours, for example, for you to replenish the funds. It never hurts to ask, and speaking with an agent could save you money.
Use a budgeting app
If you struggle with maintaining a positive account balance, a budgeting app may help with monitoring and managing your monthly expenses. There are also many budgeting apps out there, so you're likely to find one that's suitable for your unique needs.
The best budgeting apps let you link bank, credit card, and investment accounts so you can get a big-picture look at your finances. Some may also offer unique features like free credit reports or a live chat tool for couples.
Find a bank with no overdraft fees
The best banks for overdrafts have eliminated overdraft fees or reduced fees to under $5. Some provide overdraft protection so that transactions that overdraw your account will still be processed. Top banks offer free overdraft protection. Others may offer protection but charge a fee.
Overdraft fee FAQs
Banks charge an overdraft fee when you don't have enough money in your bank account to cover an ATM or debit card transaction. If you don't restore your bank account balance, the bank may close your account. This could affect your ability to open new bank accounts in the future.
Standard overdraft fees commonly range from $0 to $40, depending on the financial institution.
Some banks may forgive an overdraft fee if the customer has banked with the institution for a long time or if they regularly maintain a positive account balance. You can request a waiver by calling and speaking to a customer service representative.
Overdraft protection typically involves authorizing the bank to transfer money from your savings account to cover a shortfall of funds. Though banks often charge a fee for this service, it is usually less than the cost of standard overdraft coverage, where the bank itself covers the shortfall.
Overdraft fees typically apply to debit card transactions and ATM withdrawals unless you have opted into your bank's overdraft protection program. Electronic withdrawals, like those associated with online bill pay, and paper checks that overdraw an account trigger insufficient funds fees rather than overdraft fees.
