Avoid or Reduce Overdraft Fees Avoid or Reduce Overdraft Fees

Do you know if you have opted in for 

debit and ATM overdraft coverage?

What’s an overdraft?

An overdraft occurs when you 

spend or withdraw more money 

than is available in your checking 

account. Banks or credit unions 

can advance you money to cover 

the shortfall and charge you

a fee.

What you should know 

about overdraft fees:

•	Institutions can’t charge you for overdrafts on ATM or point-of-sale 

debit card transactions unless you have opted in. 

•	Overdraft fees can cost between $30 and $35 per transaction.

•	Banks and credit unions can charge you several overdraft fees per 

day (although some financial institutions set daily maximums).

•	Many financial institutions also charge an additional extended 

overdraft fee if you fail to repay the shortfall within a few days.

Tips to avoid overdrafts:

•	Track your balance carefully. 

•	Sign up for low-balance e-mail or text message alerts.

•	Know when regular electronic transfers, such as rent, mortgage 

payments or utility bills, will be paid, and how much they will be.

•	Know when the money you deposit will be available for your use.

Do you know if you have opted in for 

debit and ATM overdraft coverage?

What’s an overdraft?

An overdraft occurs when you 

spend or withdraw more money 

than is available in your checking 

account. Banks or credit unions 

can advance you money to cover 

the shortfall and charge you

a fee.

What you should know 

about overdraft fees:

•	Institutions can’t charge you for overdrafts on ATM or point-of-sale 

debit card transactions unless you have opted in. 

•	Overdraft fees can cost between $30 and $35 per transaction.

•	Banks and credit unions can charge you several overdraft fees per 

day (although some financial institutions set daily maximums).

•	Many financial institutions also charge an additional extended 

overdraft fee if you fail to repay the shortfall within a few days.

Tips to avoid overdrafts:

•	Track your balance carefully. 

•	Sign up for low-balance e-mail or text message alerts.

•	Know when regular electronic transfers, such as rent, mortgage 

payments or utility bills, will be paid, and how much they will be.

•	Know when the money you deposit will be available for your use.
Avoid or Reduce Overdraft Fees Avoid or Reduce Overdraft Fees

Know your overdraft options

If you regularly pay overdraft fees, there may be steps

you can take to reduce or eliminate them.

Three options to consider:

•	Make your choice on debit and ATM overdraft coverage.

Without overdraft coverage, your debit card will be declined if you 

don’t have enough money in your account to cover a purchase or 

ATM withdrawal. But you won’t 

incur fees either.

•	Link your checking 

account to a savings 

account. If you overdraw 

your checking account, money 

will be taken from your linked 

savings account to cover 

the difference. You may be charged a transfer fee each time this 

happens, but it is usually much lower than the fee for an overdraft.

•	Ask your financial institution if you’re eligible for a line

of credit. You may also be able to link overdraft coverage to your 

credit card. You may have to pay a fee when the credit line is tapped, 

and you will owe interest on the amount you borrowed, but this is still 

a much cheaper way to cover a brief cash shortfall.

Know your overdraft options

If you regularly pay overdraft fees, there may be steps

you can take to reduce or eliminate them.

Three options to consider:

•	Make your choice on debit and ATM overdraft coverage.

Without overdraft coverage, your debit card will be declined if you 

don’t have enough money in your account to cover a purchase or 

ATM withdrawal. But you won’t 

incur fees either.

•	Link your checking 

account to a savings 

account. If you overdraw 

your checking account, money 

will be taken from your linked 

savings account to cover 

the difference. You may be charged a transfer fee each time this 

happens, but it is usually much lower than the fee for an overdraft.

•	Ask your financial institution if you’re eligible for a line

of credit. You may also be able to link overdraft coverage to your 

credit card. You may have to pay a fee when the credit line is tapped, 

and you will owe interest on the amount you borrowed, but this is still 

a much cheaper way to cover a brief cash shortfall.

ConsumerFinance.gov ConsumerFinance.gov

Change your mind?

You can change your overdraft 

decision at any time. Just let 

your financial institution know.

Change your mind?

You can change your overdraft 

decision at any time. Just let 

your financial institution know.