What is an overdraft fee?

An overdraft fee is charged when your bank pays a transaction that exceeds your available balance, leaving your account negative. The typical fee is $25–$36 per transaction. Chase charges $34, Wells Fargo charges $35, and Bank of America charges $10. Banks including Capital One, Ally, and Citibank have eliminated overdraft fees entirely.

What happens when you overdraft your account?

Your account balance goes negative. If you have standard overdraft coverage, the bank pays the transaction and charges a fee ($25–$36). If you don't have coverage, the transaction is declined with no fee. You typically have 24–48 hours to bring your balance positive before additional fees or consequences apply.

Does overdrafting hurt your credit score?

Overdrafting does not directly affect your credit score — banks don't report overdraft fees to credit bureaus. However, if your account stays negative for 30–60 days, the bank may close the account and send the debt to collections, which does appear on your credit report. Unpaid overdrafts are also reported to ChexSystems, making it harder to open new bank accounts.

How many overdraft fees can a bank charge per day?

Most banks limit overdraft fees to 3–6 per day. Chase allows up to 3 per day ($102 maximum). Wells Fargo allows up to 3 ($105 maximum). Bank of America caps at 2 per day ($20 maximum). Some banks waive the fee if your end-of-day balance is above a small negative threshold — Chase waives it if your balance stays above -$50.

What Is an Overdraft? How Overdrawing a Bank Account Works (2026)

An overdraft happens when your bank account balance drops below $0 — you’ve spent or withdrawn more than you have. The bank then either pays the transaction and charges you an overdraft fee (typically $25–$36), or declines the transaction entirely with no fee.

The average American who overdrafts pays $150–$250 per year in overdraft fees. Understanding how overdrafts work is the first step to eliminating them.

How an Overdraft Works: Step by Step

You initiate a transaction — a debit card purchase, check, bill payment, or ATM withdrawal
The bank checks your available balance against the transaction amount
Your balance is insufficient to cover the full amount
If you have overdraft coverage: The bank approves the transaction and immediately charges an overdraft fee
If you don’t have coverage: The transaction is declined (debit card) or returned (check/ACH)
Your account shows a negative balance
You have typically 24–48 hours to deposit enough to bring your balance positive

Worked example: You have $23.50 in your checking account. A $65 utility payment posts. With standard overdraft coverage, the bank pays the $65 and charges a $34 fee. Your balance is now -$75.50. You need to deposit at least $75.51 to bring your account to zero.

Types of Overdraft Coverage

1. Standard Overdraft Coverage (Opt-In Required for Debit Cards)

Under Federal Reserve Regulation E, banks cannot automatically enroll you in overdraft coverage for everyday debit card transactions and ATM withdrawals. You must opt in.

If you opt in: Debit card transactions that exceed your balance are approved, and you’re charged a fee
If you opt out: Debit card transactions are declined at the point of sale — no fee, no embarrassment, just a declined card

This is an important choice. Most financial advisors recommend opting out of debit card overdraft coverage. A declined debit card is inconvenient but free.

2. Overdraft on Checks and ACH Payments

Regulation E’s opt-in requirement doesn’t apply to checks, recurring bill payments, and ACH transfers. Banks can pay these and charge a fee — or return them and charge an NSF (non-sufficient funds) fee — without your specific opt-in.

3. Overdraft Protection via Linked Account

A separate service where your bank automatically transfers funds from a linked savings account or money market when you overdraft. Most major banks offer this for free.

4. Overdraft Line of Credit

A pre-approved credit line attached to your checking account. When you overdraft, you borrow from the line at an interest rate (typically 14–26% APR) instead of paying a flat fee.

Overdraft Fees by Major Bank (2026)

Bank	Overdraft Fee	Max Per Day	Notable Policy
Capital One 360	$0	N/A	Eliminated entirely
Ally Bank	$0	N/A	Eliminated entirely
Citibank	$0	N/A	Eliminated entirely
Chime	$0	N/A	SpotMe cushion up to $200
SoFi	$0	N/A	$50 Paycheck Coverage
Bank of America	$10	2 ($20)	No fee if overdrawn under $1
Chase	$34	3 ($102)	No fee if end-of-day balance ≥ -$50
Wells Fargo	$35	3 ($105)	24-hour grace period
TD Bank	$35	3 ($105)	$5 buffer
PNC	$36	4 ($144)	Low Cash Mode: extra time to deposit
U.S. Bank	$36	4 ($144)	$5 cushion before fee
Truist	$36	6 ($216)	Small balance grace

The Real Cost of Overdraft Fees

Overdraft fees are one of the highest-cost forms of short-term borrowing. Consider:

Three $35 overdraft fees on transactions totaling $30 means you paid $105 to borrow $30 temporarily
Annualized, that’s an effective interest rate well over 1,000%
The CFPB found that overdraft fees disproportionately affect lower-income households

By contrast, a cash advance from a credit card at 29% APR on $30 held for 30 days costs about $0.72.

How to Prevent Overdrafts

1. Set up low-balance alerts. Most banking apps let you set a text/email alert when your balance drops below a threshold like $50 or $100. This gives you time to act before you overdraft.

2. Enable overdraft protection. Link a savings account to your checking at the same bank. If you overdraft, funds are transferred automatically — most major banks now do this for free.

3. Opt out of debit card overdraft. Call your bank or change the setting in the app. Your debit card gets declined instead of racking up fees.

4. Build a small cash buffer. Even $200–$300 in checking beyond what you expect to spend each month prevents most accidental overdrafts.

5. Switch to a no-overdraft-fee bank. Capital One, Ally, and Chime have permanently eliminated overdraft fees. If you overdraft frequently, switching banks may be the most effective solution.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy