Overdraft fees and how to get a refund

An overdraft fee is charged when your bank pays a transaction that takes your balance below zero, and an NSF (non-sufficient funds) fee is charged when it declines or returns one instead. Under federal Regulation E, a bank cannot charge overdraft fees on ATM withdrawals or one-time debit card purchases unless you opted in, and you can opt out at any time. If you were already charged, ask for a refund: banks often waive a fee or two, especially for customers with a good history.

The fees, side by side

Every bank sets its own fees and limits, so check the fee schedule for your account. Many banks also cap how many fees they charge in a day.

Which transactions the opt-in rule covers

The Regulation E opt-in only covers ATM withdrawals and one-time debit card purchases, like buying groceries with your debit card. If you have not opted in, the bank should decline those transactions without a fee when you do not have enough money, or pay them without charging an overdraft fee.

The opt-in does not cover checks, automatic bill payments (ACH), or recurring debit card payments such as subscriptions. For those, your bank may pay the item and charge an overdraft fee, or return it and possibly charge an NSF fee, depending on its policy. Ask your bank how it handles each type.

How to opt in or out

1. Find the setting. Most banks let you change it in online or mobile banking, often under "overdraft" or "debit card settings". You can also call or visit a branch.
2. Choose what you want. Opting out means a debit purchase is usually declined when you are short. Opting in means it usually goes through, with a fee.
3. Get confirmation. Your bank must confirm your choice. Save it.
4. Review other overdraft settings. Ask whether you can also turn off overdraft coverage for checks and automatic payments, or link a savings account instead.

Why fees can pile up

• Several items in one day. One short day can mean several fees if multiple payments hit at once.
• Pending holds. A gas station, hotel or restaurant hold can reduce your available balance for days.
• Deposit holds. A deposited check may not be fully available right away, even if it shows in your balance.
• Available vs current balance. Banks usually decide overdrafts using your available balance, which subtracts pending transactions.

How to ask for a refund

Refunding an overdraft fee is usually a courtesy, not a legal right, but it is worth asking. Banks often refund a recent fee, particularly the first one in a while.

1. Ask soon. Call or use secure chat within a few days of the fee.
2. Be specific. Give the date and amount of each fee.
3. Explain briefly. Mention a deposit delay, a one-time mistake, or your history with the bank.
4. Ask for all of them. If several fees came from one event, ask for every one to be refunded.
5. Ask again or escalate politely if the first person says no. A supervisor may have more discretion.

If the bank made a mistake, such as posting a deposit late, charging you twice or processing a payment you had stopped, that is not a courtesy request. Errors in electronic transfers can be disputed under Regulation E, generally within 60 days of the statement showing the error, and the bank must investigate. Put it in writing.

Many banks have cut back on fees

Since 2021, many large banks have reduced or dropped overdraft fees, and many stopped charging NSF fees altogether. Common changes include:

• no fee when you are overdrawn by less than a small set amount
• a grace period, often a day, to bring your balance back up before a fee applies
• lower fees and lower daily caps
• no overdraft fees at all on some accounts

Many online banks and credit unions also offer accounts with no overdraft fees. A federal rule that would have limited overdraft fees at the largest banks was repealed in 2025, so fees are still mostly set by each bank's own policy. Policies change, so read your bank's current fee schedule rather than relying on old news.

Alternatives to paying overdraft fees

• opt out of debit card and ATM overdraft coverage
• turn on low-balance alerts by text or app notification
• link a savings account for automatic transfers
• keep a small cushion in checking
• move bill due dates to just after payday
• switch to an account with no overdraft fees

Be careful with cash-advance apps and short-term loans used to avoid overdrafts. Subscription fees, "tips" and express fees can cost more than the overdraft would have.

When to complain

If your bank charged a fee it said it would not, charged you on a debit purchase after you opted out, or refused to fix its own error, complain in writing to the bank first. Our guide on how to file a complaint against a company covers the next steps, including regulators such as the Consumer Financial Protection Bureau (CFPB). You can also see how banks handle bank account complaints or look up your bank.

This guide is general information, not legal or financial advice.

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