Your bank will charge you a fee, usually $25 to $35, and may decline transactions until you add money back

When your checking account balance drops below zero, your bank treats it as a loan you owe them. They charge an overdraft fee — a flat amount per transaction that goes through while your account is negative. The fee itself makes your balance more negative, which can trigger another fee if you make another purchase before depositing money.

Most banks will still process transactions that push you into the negative, but some will start declining new transactions once you cross below zero. This varies by bank and by account type. The key thing to know is that going negative does not lock your account or report you to a credit bureau when ready — but the fees add up fast, and the longer you stay negative, the more fees you may owe.

Key Takeaways

  • Each transaction that goes through while your account is negative usually costs $25 to $35 in overdraft fees, and the fee itself makes your balance worse.
  • Your bank may decline new transactions once you go negative, or may allow them through and charge you for each one — the policy depends on your bank and account.
  • Staying negative for more than a few days can result in multiple fees stacking up, sometimes totaling more than the original overage.
  • Depositing money stops new fees from being charged, but does not erase fees already assessed — you have to contact your bank to ask them to reverse fees in some cases.
  • Some banks offer overdraft protection, which links your checking account to savings or a credit line to prevent the account from going negative in the first place.

How overdraft fees stack up

If your account has $50 and you make a $75 purchase, you are now at -$25. Your bank charges a $30 overdraft fee. Your balance is now -$55. If you make another purchase for $20 before you deposit money, that transaction goes through (at most banks), and you are charged another $30 fee. You are now at -$105, even though you only overspent by $75 to begin with.

Banks process transactions in different orders throughout the day, which can make this worse. If you have multiple small purchases pending, they may all post at once, each triggering its own fee. Some banks charge one fee per day instead of per transaction, but you should check your account agreement to know which rule applies to yours.

The longer your account stays negative, the more fees you accumulate. If you go negative on a Friday and do not deposit money until Monday, you may have been charged fees on Friday, Saturday, and Sunday — even though the bank is closed and you had no way to fix it when ready.

What happens to transactions while you are overdrawn

Most banks will continue to process debit card purchases and online transfers even after your account goes negative. This is called overdraft coverage, and it is the default at many large banks. The bank is essentially lending you the money temporarily, and charging you a fee for it.

Some banks and credit unions, particularly smaller ones, will decline transactions once your balance hits zero. This means your debit card will be rejected at the register, or your online bill payment will not go through. This can be frustrating in the moment, but it prevents the fee spiral that happens when multiple transactions post while you are negative.

Checks and automatic bill payments (like a utility payment set to come out on the 15th of each month) are treated differently than debit card purchases. These often go through even if your account is negative, because they are harder for the bank to stop once they are in the system. This is another reason why going negative can be expensive — you may not realize how many payments are about to hit.

How to stop the fees once your account is negative

The fastest way to stop new fees is to deposit money. As soon as your balance goes back to zero or positive, your bank stops charging overdraft fees on new transactions. You do not have to wait for the deposit to fully clear — most banks stop charging fees once they see the deposit is on the way.

Depositing money does not erase fees that have already been charged. If you went negative on Monday and deposited money on Wednesday, you still owe the fees from Monday and Tuesday. Some banks will reverse one overdraft fee per year if you ask, especially if you have been a customer for a long time and this is your first time going negative. It is worth calling and asking, but do not count on it.

If you cannot deposit money right away, contact your bank and explain the situation. Some banks have hardship programs or can work with you on a payment plan. This is especially true if you went negative because of an error on the bank's part, or because of an unexpected emergency. Banks are more willing to negotiate than most people realize.

Overdraft protection: preventing the problem before it starts

Many banks offer overdraft protection, which automatically transfers money from another account (usually your savings account) or from a credit line to cover a shortfall. If you have $200 in savings and $50 in checking, and you try to spend $75, the bank moves $25 from savings to checking so the transaction goes through. You are not charged an overdraft fee.

Overdraft protection costs nothing if you never use it. If you do use it, some banks charge a small transfer fee (usually $1 to $3), which is much cheaper than an overdraft fee. The catch is that you have to have another account with the bank, or a credit line through them, to set it up.

You can usually turn overdraft protection on or off through your online banking portal or by calling your bank. If you have a savings account but have never set up overdraft protection, ask your bank how to link the accounts. It takes a few minutes and can save you hundreds of dollars if you ever come close to going negative.

When going negative affects your banking future

Going negative does not show up on your credit report, so it will not hurt your credit score. However, if you stay negative for a long time without paying the fees, your bank may close your account. Banks use a system called ChexSystems to track customers who have unpaid overdraft fees or who repeatedly overdraw their accounts. If your bank reports you to ChexSystems, other banks may decline to open an account for you.

This usually only happens if you ignore the problem for months. If you go negative, deposit money within a week or two, and pay any fees, you will not end up in ChexSystems. But if you go negative, ignore the fees, and the balance keeps getting worse, your bank will eventually close the account and may report you.

If your account is closed because of unpaid overdraft fees, you can still open a new account at a different bank — but some banks will ask about your ChexSystems history. Smaller banks and credit unions are often more willing to work with people who have had problems in the past.

Checking your bank's overdraft policy before you need it

Every bank has different rules about overdraft fees, how many times they will charge per day, and whether they offer overdraft protection. You can find these rules in your account agreement, which your bank sent you when you opened the account. If you cannot find it, log into your online banking or call your bank and ask for the overdraft policy.

Look for these specific details: the overdraft fee amount, whether the bank charges per transaction or per day, whether overdraft protection is available, and what the transfer fee is if you use it. Knowing these details ahead of time means you will not be surprised if you ever come close to going negative.

If your bank's overdraft fees are high and they do not offer overdraft protection, you might consider switching to a bank that does. Some online banks and credit unions charge lower overdraft fees or offer free overdraft protection. It is worth comparing if you know you sometimes run close to zero.

Frequently Asked Questions

Can my bank close my account if I go negative?

Your bank can close your account if you stay negative for a long time without paying the fees — usually several months. If you go negative, deposit money within a week or two, and pay the fees, your account will stay open. Repeated overdrafts over years may also trigger a closure, even if you pay each time.

Will going negative hurt my credit score?

No. Overdraft fees and negative balances do not appear on your credit report. However, if your bank closes your account and reports you to ChexSystems, other banks may see that history and decline to open an account for you.

What if I dispute an overdraft fee?

You can call your bank and ask them to reverse the fee, especially if it was caused by an error on their part or if you have been a customer for years. Banks are not required to reverse fees, but many will reverse one per year if you ask politely. Put your request in writing if the bank declines over the phone.

Does overdraft protection cost money if I do not use it?

No. Overdraft protection is free to set up and free to have. You only pay a fee if you actually use it to cover a shortfall, and that fee is usually $1 to $3 — much less than an overdraft fee.

What is the difference between overdraft protection and overdraft fees?

Overdraft protection prevents your account from going negative by automatically moving money from another account. Overdraft fees are charges you pay when your account does go negative. Protection stops the problem; fees are the cost of the problem happening.