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Banks charge overdraft fees when a customer makes a transaction that brings their account balance into the negative. Overdraft fees are typically in the range of $30-$35 per instance, and some banks charge that fee multiple times per day if the customer keeps making transactions that overdraw their account. Some banks also charge continuous negative balance fees. If the funds in a customer's account aren't replenished within a certain period, they will be charged an additional fee. (If you're looking for a new account, see NerdWallet's picks for best checking accounts.)
» See the latest in overdraft fee news
Overdraft fees can add up very quickly. People who don't pay their overdraft fees can sometimes have their information sent to ChexSystems, a reporting system that keeps track of consumers who might be risky bank customers. Being in ChexSystems can make it very difficult for you to open a new bank account.
» Learn more about ChexSystems
Some banks might reverse overdraft fees for customers in good standing. Still, if overdrafts are an ongoing problem, there are options for overdraft coverage and other ways to avoid paying an overdraft fee. Some major banks and credit unions have recently reduced or eliminated overdraft fees, including Discover, Ally, Capital One and Alliant Credit Union.
Banks that have recently reduced or eliminated overdraft fees
New overdraft policy and fees
Alliant Credit Union
In 2021, Alliant Credit Union decided to eliminate overdraft and nonsufficient funds fees.
In June 2021, Ally eliminated overdraft fees and now offers two forms of free overdraft coverage: free overdraft protection transfers from a linked Ally savings or money market account and its CoverDraft service, which allows customers to overdraft up to $100 with 14 days to replenish the account funds.
Bank of America
Bank of America announced in 2022 that it will eliminate nonsufficient funds fees — also known as bounced check fees — and remove its overdraft protection transfer fee. In May 2022, the bank reduced its overdraft fee to $10 and this fee can only be charged two times per day.
Capital One announced in late 2021 that it would eliminate overdraft and nonsufficient funds fees for customers.
In February 2022, Citibank announced that it would remove overdraft fees, overdraft protection fees and returned items fees by summer 2022.
In 2019, Discover removed its overdraft and insufficient fund fees. If a customer tries to make a transaction that would result in an overdraft, they can use a free overdraft protection transfer from another Discover account to cover the cost of the transaction.