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Key takeaways
- A bank charges overdraft fees when you spend more than you have in your account, and they may cost around $35 per transaction.
- Overdraft fees differ from NSF fees: overdraft means the bank pays for your purchase and charges you, while NSF means the bank declines the transaction (and still charges you).
- You can avoid overdraft fees by opting out of overdraft coverage, setting up account alerts, linking a backup account, or switching to a fee-free financial institution.
- Some banks will waive your first overdraft fee if you ask – especially if you’re a customer in good standing.
Overdrafts happen when you don’t have enough money in your account to cover transactions. When a bank covers an overdraft, it may charge you an overdraft fee of around $35 per transaction. While these charges are one of the most expensive fees banks can tack on, you’ve got options for avoiding them. Here’s what overdraft fees are, how they work, and proven ways you can keep more of your hard-earned money in your pocket.
What is an overdraft fee?
An overdraft fee is a charge your bank may assess when you don’t have enough money to cover a transaction (i.e., insufficient funds). It often costs around $35 per transaction. The bank covers the transaction using its own money, then charges you the overdraft fee on top of the amount you overspent.
When this happens, you’re on the hook for paying back both the overdrawn amount and the overdraft fee. If you don’t pay, the bank can deduct what you owe from your next deposit. If your account stays negative for too long, your bank could close it and send the debt to a collection agency.
Overdraft fee example: Let’s say you spend $125 on groceries, but you only have $100 in your checking account. The bank will cover the $25 difference so you can complete your transaction. If your bank also charges an overdraft fee of $30, you’ll end up with an account balance of -$55 (the $25 the bank covered plus the $30 fee).
How much are overdraft fees? Costs explained
While overdraft fees can add up to $35, the average cost of overdraft fees is $27 as of 2025, down slightly from the year before. That’s no insignificant sum – and if you overdraft your account often, it can add up fast.
The exact amount you’ll pay for an overdraft fee varies. Here’s a quick look at what an overdraft fee may cost:
| Checking Account | Overdraft Fee |
|---|---|
| Chase² | $34 for each item that overdraws your account by more than $50, with a maximum of three fees per business day up to $102 |
| Wells Fargo³ | $35 per item, with no more than three overdraft fees per business day |
| Bank of America4 | $10 on some account types |
| Capital One5 | $0 |
| USAA7 | $0 (bank declines payments if you have insufficient funds) |
| Chime8 | $0 |
| Ally Bank9 | $0 |
Overdraft Fee Calculator 
Overdraft fees vs. NSF fees: What's the difference?
It’s easy to mix up overdraft fees and non-sufficient funds (NSF) fees, but there’s a key difference. An overdraft fee happens when the bank covers a transaction for you, even though you didn’t have enough money. You get what you paid for, but your account goes negative and you get charged a fee.
An NSF fee – also called a returned item fee – happens when the bank declines the transaction. You don’t get the item or service, but the bank still charges you a fee for the attempt. In some cases, you might even get hit with both if you try the transaction again.
The good news? While many banks charge these fees, some financial institutions – like Chime® – don’t charge either type of fee.¹
What is overdraft protection?
Overdraft protection is a service that links your checking account to a secondary account, like a savings fund. If you try to spend more than you have, the bank automatically moves money from your backup source to cover the difference.
This can help you avoid declined transactions or overdraft fees; however, some banks may charge an overdraft protection transfer fee (for example, U.S. Bank charges a fee of $12.50 under certain conditions).
Not all banks offer this service, so check with yours to see if it’s available.
How to avoid overdraft fees
Avoiding overdraft fees is fairly simple if you’re proactive with your bank account and budget. The tips below can help you avoid overdrafts and keep more money in your pocket.
1. Opt out of automatic overdrafts
Banks may give you the option to opt in or out of automatic overdrafts when you open a checking account.
This disclosure is usually in the paperwork the bank provides when you open the account. Look for it in the section covering account opening disclosures.
The caveat to this method is that if you opt out, you’ll have no way to cover a purchase exceeding your available balance. The bank will return any failed payments to you as “unpaid” – unless you sign up for overdraft protection.
2. Use overdraft protection
If your bank offers overdraft protection, consider setting it up. This links a backup account to your checking account so funds automatically transfer to cover shortfalls. You’ll need sufficient funds in your secondary account for this approach to work.
3. Set up account alerts
One common reason people end up with overdraft fees is that they carry a low account balance. An easy solution is to set up account alerts so you always know when your balance drops past a certain amount.
4. Use a service that doesn’t charge overdraft fees
While some banks still charge overdraft fees, plenty have eliminated them. If you’re prone to frequent overdraft charges, consider switching to an online checking account with no fees to eliminate the issue.
5. Cover the overdrawn charge as soon as possible
It is prudent to cover an overdrawn balance as soon as possible – especially at banks that waive overdraft fees if you bring the account back to a positive available balance within an extra business day (subject to the bank’s cut-off times and terms).
If you can’t find an answer on their website, call customer service. Even if your bank doesn’t officially offer this service, it’s worth asking if it can clear your overdraft fee.
How to get overdraft fees waived
If you rack up an overdraft fee or two, don’t panic. Your bank might waive or reduce the fees if you ask.
You can call the bank to ask about reducing fees or visit a branch to make your case. Whether the bank agrees to your request can depend on factors like your:
- Account history: Longer-term customers in good standing have better odds of getting their request approved.
- Overdraft frequency: First-time overdrafts are more likely to be forgiven.
- Overdrawn amount: Smaller overdrafts may be easier to get waived.
For example, if you’ve had your account for five years and this is your first overdraft, the bank might be more understanding about waiving the fee.
On the other hand, getting a waiver might be tougher if you’re a newer customer or have a history of frequent overdrafts.
Keep more money in your pocket
Unexpected bank fees like overdraft fees don’t have to drain your budget. Whether you set up account alerts, opt out of overdraft coverage, or switch to a fee-free financial institution, you’ve got options for protecting your money.
Take the steps that work for your situation, and keep practicing smart financial habits to stay on track toward your goals.
FAQs
Do overdraft fees hurt your credit?
Overdraft fees won’t directly impact or harm your credit score. Banks don’t usually report checking account information to the major credit bureaus. Overdrawn charges usually won’t appear on your credit report unless they go unpaid and end up in collections.
How long do overdraft fees stay on your record?
The only way an overdraft fee would be on your record in the first place is if you were charged an overdraft fee that you never repaid. In this case, it could go to collections—and anytime an account goes to collections, it remains on your credit report for seven years.
Are overdraft fees the same as a nonsufficient funds (NSF) fee?
No. Overdraft fees are charged when banks accept and pay the transaction that overdraws the account. Banks charge non-sufficient fund fees when the funds in your account can’t cover a payment, like a check or electronic payment.
What are continuous/daily overdraft fees?
Continuous day overdraft is when a bank charges an overdraft fee each day an account remains overdrawn. These charges typically continue up to a maximum fee, which varies by bank.
Can I overdraft at an ATM?
You can only overdraft at an ATM if you’ve opted into that service with your bank. Otherwise, the ATM will decline your withdrawal if you don’t have enough funds.
For more insight into your account’s specific limits, check out our article on how much you can overdraft your checking account.