BMO lets you overdraft, but only if you set it up first

BMO does not automatically overdraft your checking account. If you try to spend more money than you have, the transaction will be declined at the point of sale or ATM. To overdraft, you need to enroll in overdraft protection — a service that covers shortfalls by pulling money from another account or a line of credit.

The key difference: overdraft protection is optional. You have to request it. Once active, it works automatically when your balance goes negative. Without it, you cannot overdraft, period.

Key Takeaways

  • BMO overdraft protection requires you to enroll; it does not happen by default, and transactions will decline if you have no coverage in place.
  • You can link overdraft protection to another BMO account you own, a BMO line of credit, or a BMO credit card, depending on which products you hold.
  • BMO charges an overdraft fee each time the protection activates, typically $35 per transaction, though the exact amount depends on your account type and region.
  • Overdraft transfers happen in real time at the point of sale, but you are responsible for repaying the borrowed amount when ready or it accrues interest.
  • You can turn overdraft protection on or off through BMO's online banking, mobile app, or by calling customer service.

What happens when you overdraft through BMO protection

When overdraft protection is active and you attempt a transaction that would make your balance negative, BMO automatically transfers money from your linked source to cover the shortfall. The transaction goes through. You are charged a fee — typically $35 per overdraft event — and the borrowed amount sits in your account as a debt you owe.

The timing matters. Debit card purchases and ATM withdrawals trigger the transfer when ready. Checks and ACH transfers (like bill payments) may take longer to clear, which means you could overdraft without realizing it until the next day. BMO's online banking shows pending transactions, so you can see what is coming.

If you do not repay the overdraft quickly, interest accrues on the borrowed amount. The interest rate depends on what you borrowed from — a savings account transfer has no interest, but a line of credit or credit card advance does. Check your account agreement or call BMO to confirm the rate on your specific setup.

The three sources BMO can pull from

BMO offers three ways to cover an overdraft. You choose which one when you enroll in protection.

Another BMO checking or savings account you own: This is the simplest option. If you have a second account with BMO, you can link it as your overdraft source. BMO transfers money from that account to your checking account when needed. There is no interest charged on the transfer itself, but you lose the money from your savings account, so your emergency fund shrinks. This works only if your linked account has enough balance to cover the overdraft.

A BMO line of credit: If you have a personal line of credit with BMO, you can use it as overdraft protection. BMO advances you money from the credit line when your checking account goes negative. You pay interest on the amount borrowed, at the rate set in your line of credit agreement. This is useful if you do not have a savings account to link, but the interest cost adds up if you overdraft frequently.

A BMO credit card: Some BMO credit cards can be linked to overdraft protection. When your checking account goes negative, BMO advances cash from your credit card's available balance. You pay interest on the cash advance, which is typically higher than the purchase rate on the card. This is the most expensive option and is best used only in emergencies.

Overdraft fees and how they stack up

BMO charges a fee each time overdraft protection activates. The standard fee is $35 per transaction in most regions, though some account types or promotional offers may have different rates. This fee is separate from any interest you owe on the borrowed amount.

The fees can accumulate quickly if you overdraft multiple times in a short period. For example, if you make three debit card purchases on the same day and all three trigger overdraft protection, you could be charged $105 in fees alone, plus interest on the borrowed amounts. BMO does not cap the number of overdraft fees per day or per month, so it is possible to incur many fees in a single statement cycle.

Some BMO account packages include overdraft protection with a reduced fee or waived fees for the first occurrence per month. Check your account agreement or ask BMO directly about what you are enrolled in, because the terms vary by account type and region.

How to set up or change overdraft protection

To enroll in overdraft protection, log into BMO's online banking portal or open the BMO mobile app. Navigate to your checking account settings, then look for "Overdraft Protection" or "Account Services." You will be asked to choose which account or credit product you want to link as your source. BMO will verify that you own the linked account and that it is may be able to access.

The setup is usually when ready. Once confirmed, overdraft protection is active when ready. You can change your linked source at any time — for example, if you want to switch from your savings account to your line of credit — by updating the same settings. You can also turn overdraft protection off entirely, which means future transactions will decline if you do not have sufficient balance.

If you prefer to set this up by phone, call BMO customer service. They can walk you through the options and enroll you over the call. Keep your account number and the account or credit product number of your intended source handy when you call.

When overdraft protection does not work

Overdraft protection has limits. If your linked source does not have enough money, the overdraft transfer fails and your transaction is declined. For example, if your savings account has $200 and you try to withdraw $500, BMO can only transfer $200, leaving you $300 short. The transaction declines.

Some transactions cannot be covered by overdraft protection at all. Wire transfers, for instance, typically cannot be overdrafted — they either go through with sufficient funds or they are rejected. International transactions and some bill payments may also be excluded depending on your account type.

If you hit your overdraft limit or your linked source runs out of money, you will need to deposit funds into your checking account or find another way to cover the shortfall. Overdraft protection is a safety net, not a line of credit you can tap indefinitely.

Overdraft protection versus overdraft fees without protection

Without overdraft protection, a transaction that exceeds your balance is straightforward declined. You do not get charged a fee for the declined transaction. However, some transactions — particularly checks and ACH transfers — may clear before you realize they are pending, which can create a negative balance. In that case, BMO may charge a non-sufficient funds (NSF) fee, typically $35 to $45, even though you did not enroll in overdraft protection.

The difference is control. With overdraft protection, you choose to allow overages and you pay a fee each time one occurs. Without it, you avoid fees on declined transactions, but you risk NSF fees if a transaction clears against an empty account. Neither option is free, so the choice depends on whether you want the convenience of automatic coverage or prefer to avoid the risk of overdrafting altogether.

Frequently Asked Questions

What is the difference between overdraft protection and overdraft fees?

Overdraft protection is a service you enroll in that automatically covers shortfalls. Overdraft fees are charges BMO levies when that protection activates. You can have overdraft protection without ever paying a fee if you never overdraft. You can also incur overdraft fees without enrolling in protection if a transaction clears against insufficient funds.

Can I overdraft at an ATM?

Yes, if overdraft protection is active. ATM withdrawals trigger the same automatic transfer as debit card purchases. The withdrawal goes through, you are charged the overdraft fee, and the borrowed amount appears as a debt in your account. Without overdraft protection, the ATM will decline the withdrawal.

How long do I have to repay an overdraft?

There is no fixed repayment important date. The overdraft sits in your account as a negative balance until you deposit money to cover it. However, if you borrowed from a line of credit or credit card, interest accrues daily on the borrowed amount, so the longer you wait, the more you owe. Repay as soon as possible to minimize interest charges.

Will overdraft protection hurt my credit score?

Overdraft protection itself does not appear on your credit report. However, if you borrow from a BMO line of credit or credit card to cover the overdraft, that borrowed amount counts toward your credit utilization, which can lower your score slightly. Paying it back quickly minimizes the impact.

Can I have overdraft protection on a joint account?

Yes. If you have a joint checking account with BMO, either account holder can enroll in overdraft protection. The linked source can be another account either of you owns, or a credit product either of you holds. Both account holders are responsible for repaying any overdraft, so discuss the setup before enrolling.