Money · Banking basics

Overdrafts and fees, and how to avoid them

An overdraft is when the bank covers a purchase you didn't have money for, then charges you; the FDIC says fees can run around $35 per transaction, and some banks add a daily fee. For debit card and ATM purchases, the bank can't charge an overdraft fee unless you opted in, so check your setting and opt out if you'd rather be declined. Checks and automatic payments can still bounce with an NSF fee, so turn on low-balance alerts and know your bill dates.

Easy12 min to read; 10 min to change settingsFreeChecked October 2, 2026

You'll need

Your bank's app or website, or its phone number
A list of your automatic payments and their dates

What to know

Find out whether you're opted in to debit card overdraft coverage. Check your account settings or ask your bank. The opt-in form usually comes with your account-opening papers. Source: FDIC³
Decide. If you don't opt in, you can't be charged an overdraft fee on debit card or ATM transactions; the bank may just decline the purchase. If you're opted in and change your mind, you can opt out any time by contacting the bank. Source: FDIC³
Link savings as a backup if your bank offers it. If checking runs short, money moves from savings. There's usually a fee, but it's generally less than an overdraft fee. Source: CFPB¹
Turn on low-balance alerts in your bank's app so you hear about it before you're short. Source: CFPB¹
List each automatic payment, its amount and its date, so the money is there when it comes out. Source: CFPB¹
Watch your available balance, not just deposits. A deposit may not be available right away, so you can overdraw even right after depositing. Source: CFPB²
Get your bank's fee schedule. Banks must disclose every deposit account fee, so ask for the account-opening disclosure and fee schedule. Source: FDIC³

Watch out Opting out doesn't stop every fee. Banks don't need your opt-in to charge non-sufficient funds (NSF) fees: a check or automatic payment (ACH) you can't cover can be returned unpaid and still cost you a fee, usually per transaction. Source: FDIC³

Common fees and how to dodge them

From the FDIC. Source: FDIC³

Fee	How to avoid it
Debit card overdraft (often about $35)	Don't opt in; link savings; track your balance
Daily (continuous) overdraft	Bring the account positive fast
NSF (returned check or payment)	Know payment dates; low-balance alerts
Monthly maintenance	Direct deposit, minimum balance or a set number of transactions; paperless statements
Minimum balance	Keep the minimum; ask for a low-balance alert
Out-of-network ATM	Use your bank's ATMs; ask if it reimburses other ATMs

Asking for a refund

"Hi, I was charged a $35 overdraft fee on [date]. I've had the account since [year] and this is my first one. Could you waive it as a courtesy?"

See it done

Video by FDICchannel Government

FDIC Explains: Overdraft Fees

Watch on YouTube: FDIC Explains: Overdraft Fees

2021 · Checked October 3, 2026

Video won't load at school or work? No problem. Everything you need is in the steps; the video's just a bonus. Watch it on YouTube later.

If it doesn't work

Already hit with a fee? Call the bank, ask politely whether it will waive it, and mention if it's your first. There's no rule that it must, but asking costs nothing.
Keep overdrafting? Some banks offer "checkless" card-based accounts that may let you avoid overdraft charges. Compare accounts with the FDIC's checklist. Source: FDIC³ An overdraft line of credit is another option if you qualify, but it charges a fee and interest. Source: CFPB¹
Think a fee broke your bank's own rules? Submit a complaint to the CFPB.

Good to know

The details, if you want them. Tap a line to open it.

How you can overdraw

Checks, ATM withdrawals, debit card purchases, automatic bill payments and electronic or in-person withdrawals can all overdraw an account. Source: CFPB²

What it really costs

With an overdraft program, you pay the fee on top of paying back the overdraft itself, Source: CFPB² and fees can add up quickly. Source: FDIC³

Budget first

Knowing what's coming out each month is the best overdraft protection. See Your first budget in 20 minutes.

Take it with you

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Sources

Consumer Financial Protection Bureau How can I avoid debit card overdrafts?
Consumer Financial Protection Bureau What is an overdraft?
Federal Deposit Insurance Corporation Overdraft and account fees

Lesson M1.3 · Last checked October 2, 2026 against the sources listed.

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