Overdraft Fee

An overdraft fee is what a bank charges when it pays a transaction that takes your balance below zero. The bank covers the shortfall, then charges a flat fee, often around $30 to $35 per item, which can be charged several times in one day. It differs from an NSF fee, where the bank rejects the payment instead of covering it.

Federal Regulation E sets one key protection. Under 12 CFR 1005.17, a bank cannot charge an overdraft fee on ATM withdrawals or one-time debit card purchases unless you affirmatively opted in to overdraft coverage for those transactions. Checks, recurring payments, and ACH debits are not covered by that opt-in rule.

The fees add up. The CFPB reported that consumers still paid about $5.8 billion in overdraft and NSF fees in 2023, even after many banks cut or eliminated them. A CFPB rule that would have capped overdraft fees at large banks at $5 in some cases was repealed by Congress, and President Trump signed the repeal in May 2025, so fee levels remain up to each bank.

Most overdraft class actions challenge how banks calculated fees: charging on transactions authorized when the account had enough money but settled later (the "authorize positive, settle negative" practice), reordering transactions from largest to smallest to create more overdrafts, or charging fees without a valid opt-in. See our overdraft and NSF fee lawsuit page and the guide on how to get overdraft fees refunded.