Yes, you can overdraft a checking account — but only if your bank allows it
An overdraft happens when you spend more money than you have in your account. Your bank can choose to cover that shortfall, letting the transaction go through even though your balance would go negative. Or your bank can decline the transaction and stop it from processing. Most banks offer overdraft protection as an optional service, which means you decide whether to turn it on.
The key thing to understand: overdrafting is not automatic. Your bank has to agree to it first. If you have not set up overdraft protection, a transaction that would empty your account will straightforward be rejected at the register or ATM. You will not accidentally go negative.
If you do have overdraft protection turned on and you spend more than your balance, your bank covers the difference — but charges you a fee for doing so. That fee is separate from any fees the merchant or ATM operator might charge you.
Key Takeaways
- Overdraft protection is optional; your bank will not overdraft your account unless you have turned the feature on.
- When you overdraft, your bank covers the transaction and charges you an overdraft fee, which varies by bank but often ranges from $25 to $35 per overdraft.
- You can turn overdraft protection on or off in your online banking portal, by phone, or by visiting a branch.
- Some banks offer overdraft protection linked to a savings account or credit card instead of charging a fee, which may cost less.
- Negative balances can damage your banking history and make it harder to open accounts at other banks in the future.
How overdraft protection actually works at your bank
When you have overdraft protection turned on, your bank monitors your balance in real time. If a transaction would push you below zero, the bank covers it anyway. Your account goes negative by the amount you overspent, plus the overdraft fee.
The fee is charged when ready or within one business day. Most banks charge between $25 and $35 per overdraft, though some charge more. If multiple transactions hit your account on the same day and all would overdraft, you may be charged multiple fees — one for each transaction that goes through.
Your bank will send you a notice (usually by email or text, depending on what you have set up) telling you that you have overdrafted and what the fee was. You then have to deposit money to bring your balance back to zero and cover the fee.
The difference between overdraft protection and overdraft fees
Overdraft protection is the service itself — the agreement that your bank will cover transactions even when your balance is too low. Overdraft fees are what you pay for using that service.
Not all overdraft protection works the same way. Some banks link overdraft protection to a savings account you hold with them. If you overdraft checking, the bank automatically transfers money from savings to cover it. This usually costs less than a traditional overdraft fee — sometimes just $5 or $10, or nothing at all if you have enough in savings.
Other banks link overdraft protection to a credit card or line of credit. The bank treats the overdraft like a small loan, charging you interest instead of a flat fee. This can be cheaper if you pay back the overdraft quickly, but more expensive if it sits for weeks.
A few banks offer what they call "courtesy overdrafts" — they cover small overdrafts (usually under $25) without charging a fee, as a one-time courtesy. This is not a may provide, and banks can refuse or stop offering it at any time.
How to turn overdraft protection on or off
You control whether your account has overdraft protection. Most banks let you change this setting yourself through online banking.
Log into your bank's website or app and look for account settings, preferences, or account features. You should see an option labeled "overdraft protection" or "overdraft coverage." You can usually toggle it on or off right there. The change takes effect when ready or within one business day.
If you cannot find the setting online, call your bank's customer service line or visit a branch in person. A representative can turn it on or off for you over the phone or at the desk. Ask them to confirm the change in writing or by email so you have a record.
When you turn overdraft protection off, transactions that would overdraft your account will be declined instead. Your debit card will not work, checks will bounce, and automatic bill payments may fail — but you will not be charged an overdraft fee.
What happens if you overdraft repeatedly
A single overdraft is usually just a fee and an inconvenience. But if you overdraft your account multiple times in a short period, your bank may take action.
Banks report overdraft activity to ChexSystems, a banking history database similar to a credit report. If you have too many overdrafts, ChexSystems will flag your account. Other banks can see this flag when you try to open a new account with them, and many will deny you or require you to pay a higher deposit.
Your current bank may also close your account if overdrafting becomes a pattern. Banks are required to give you notice before closing an account, usually 30 days, but they can do it. Once your account is closed, you will have a harder time opening a checking account elsewhere for several years.
If you owe your bank money from overdrafts you did not repay, they can send your debt to a collection agency. This will damage your credit score and follow you for years.
Alternatives to overdraft protection
If you are worried about overdrafting, you have other options besides relying on overdraft fees.
The simplest is to keep a small cushion in your account — $50 or $100 that you do not spend. This gives you a buffer if you miscalculate your balance or a payment comes through unexpectedly. Many people find this easier than managing overdraft protection.
Some banks offer low-balance alerts. You set a threshold (say, $100), and the bank sends you a text or email when your balance drops below it. This gives you time to deposit money before you accidentally overdraft.
If your bank offers it, linking overdraft protection to a savings account is usually cheaper than paying overdraft fees. You transfer money from savings to checking only when you need it, and you pay a small fee or nothing at all.
You can also set up automatic transfers from savings to checking on a regular schedule — say, every Friday. This keeps your checking balance topped up without you having to think about it.
What to do if you have been charged an overdraft fee
If you have been charged an overdraft fee and you believe it was a mistake, contact your bank. Explain what happened and ask them to review the transaction.
Banks sometimes refund overdraft fees as a one-time courtesy, especially if you have been a customer for a long time or if the overdraft was caused by a bank error. There is no may provide they will refund it, but it is worth asking. Be polite and specific about why you think the fee should not have been charged.
If your bank refuses and you believe they violated a rule, you can file a complaint with the Consumer Financial Protection Bureau (CFPB). The CFPB investigates complaints about banks and can sometimes force them to refund fees or change their practices. You can file a complaint on the CFPB website at no cost.
Frequently Asked Questions
Can my bank overdraft my account without my permission?
No. Federal law requires banks to get your permission before charging overdraft fees on debit card purchases and ATM withdrawals. You have to opt in to overdraft protection. However, banks can still overdraft your account for checks and automatic bill payments without your permission — those are treated differently under the law.
What is the difference between a bounced check and an overdraft?
A bounced check is one that your bank refuses to pay because you do not have enough money. An overdraft is when your bank pays the check anyway and charges you a fee. If you do not have overdraft protection, checks bounce. If you do, they clear but you pay a fee.
Will overdrafting hurt my credit score?
Overdrafting itself does not show up on your credit report, so it will not directly hurt your credit score. However, if you do not repay the overdraft and your bank sends the debt to a collection agency, that will damage your credit. Also, repeated overdrafts can make it harder to open new accounts, which indirectly affects your financial options.
Can I overdraft a savings account?
Some banks allow overdrafts on savings accounts, but it is less common than with checking. Federal law limits how many withdrawals you can make from a savings account per month, so overdraft protection on savings is not as useful. Ask your bank whether your savings account can be overdrawn.
What happens if I move money between my own accounts to cover an overdraft?
If you transfer money from a savings account or another account you own to cover an overdraft, the overdraft fee is usually waived or reversed. The bank sees that you have covered the negative balance, so there is no reason to charge you. However, the transfer itself may take one to two business days to process, so the overdraft fee might still be charged in the meantime. Contact your bank to ask them to reverse it once the transfer clears.