If your next transaction drops your checking account balance below zero, it may still go through — but at a price. And the exact price depends on your bank.
Through overdraft coverage programs, many banks cover these transactions and charge an overdraft fee in return. These programs generally cover checks and recurring online and debit card transactions. You can also get everyday debit card and ATM transactions included if you opt in for those.
But here’s the danger with this program: If you keep making transactions after your account dips below zero, your bank might hit you with multiple overdraft fees in one day.
Overdrafts themselves don’t affect your credit score. But if you’re in the habit of spending more money that you’re taking in, that can lead not only to overdrafts, but missed payments, excessive debt, and other scenarios that can lower your credit score.
In that case, you may want to get your credit score to know where you stand.
Check out what some major banks and credit unions charge for this fee below.
Overdraft fees by financial institution
|Financial Institution||Overdraft Coverage Fee (per item)||Max Fees per Day||Total Possible Cost in a Day|
|Alliant Credit Union||$25||None||N/A|
|Bank of America||$35||4||$140|
|BBVA Compass||$38 ($32 in Calif.)||6||$228 ($192)|
|BMO Harris Bank||$35||4||$140|
|Boeing Employees Credit Union||$25||5||$125|
|Comerica||$25 (1st time), $33 (2nd-4th times), $37 (5 or more)||5||$161|
|Connexus Credit Union||$29.95||Not specified; up to $300 negative balance||N/A|
|Consumers Credit Union||$30||Not specified; up to $750 negative balance||N/A|
|Fifth Third Bank||$37 (but $25 the 1st time)||10||$358|
|KeyBank||Up to $39||5||$195|
|Navy Federal Credit Union||$20||3||$60|
Some banks, about a third of the financial institutions in the table above, don’t charge overdraft fees if an account is overdrawn by $5 or less at the end of the business day. So if you buy a $7 sandwich with $2 in your account, you’d be exempt from a fee.
Institutions with no overdraft coverage fee
Overdraft coverage is generally the most expensive overdraft protection option. Some banks and credit unions offer overdraft lines of credit, meaning you pay interest on just the overdrawn amount, instead of a fixed fee. Other banks simply don’t allow you to overdraw your account at all. This means a transaction gets rejected if there isn’t enough money and you might get hit with a non-sufficient funds fee.
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Capital One 360
Capital One 360 lets you opt into an overdraft line of credit with a variable rate, and there’s no fee for signing up. On Capital One 360’s overdraft comparison calculator, you can see that the amount you pay in interest for a few days is generally less than a dollar, which is much cheaper than $30 overdraft fees. If you don’t opt into this service, your transactions get declined and there’s a $9 fee for any returned checks. That’s on top of any returned-check fee that the merchant or anyone else charges.
Discover doesn’t let you overdraw your account, so you pay a $30 non-sufficient funds fee for any transaction that you can’t pay.
The online financial institution EverBank has a personal overdraft line of credit with a variable rate, so you pay interest on any overdrawn amount. Although there is no fee for signing up, missing a payment on any interest by the given due date results in a late fee of $25. You can also opt into an overdraft protection transfer service by linking an account or line of credit to your checking. Outside of these services, you’d pay a $30 non-sufficient funds fee for transactions that cause overdrafts, except for one-time debit card and ATM transactions.
Pentagon Federal Credit Union
The military-targeted credit union PenFed doesn’t have overdraft services, so you’d pay a non-sufficient funds fee of $30.
This investment brokerage’s bank accounts don’t charge fees for its overdraft protection services. If you don’t opt into one of them, though, there’s a non-sufficient funds fee of $25 that can be charged up to four times per day.
Other overdraft programs
Outside of the banks without overdraft coverage fees, you can generally find a cheaper overdraft service at your bank called overdraft protection transfers. These are opt-in programs that link a second account to your checking account, where you’d normally incur overdrafts, so an overdraft triggers a transfer from the second account to cover the transaction. The linked account can be a savings account, credit card, line of credit or even another checking account, depending on the bank’s policy. The cost of this transfer is around $10 or $12, though it can be cheaper.
Overdraft fees, especially from overdraft coverage, are some of the steepest fees that banks charge. Knowing these fees might help you consider to opt out of the programs or find cheaper overdraft alternatives that your bank offers.
This article was updated June 13, 2016. It was originally published in July 2013.