How to stop paying overdraft fees and get out of the red

Why overdraft gets so expensive

When you spend more than your checking balance, your bank may cover the difference and charge an overdraft fee, often around $30 to $35 per transaction at banks that still charge it. Several small purchases in one day can mean several fees. Some banks also charge an extended overdraft fee if the account stays negative for days.

A federal rule that would have capped overdraft fees at large banks was repealed by Congress in 2025, so the rules depend on your bank. Many banks and credit unions have cut or eliminated overdraft fees on their own, so it pays to check your account terms.

Read also: Credit card revolving interest: why it grows so fast and Emergency fund: how much to save and where to keep it.

What you can opt out of

For ATM withdrawals and one-time debit card purchases, banks need your permission, called opting in, before charging an overdraft fee. If you opt out, the transaction is simply declined when you do not have the money, with no fee. Checks and automatic payments work differently and can still trigger fees, so read your bank's policy.

Another option is overdraft protection that pulls money from your linked savings account. It usually costs much less than an overdraft fee, or nothing at all.

Source: Consumer Financial Protection Bureau, Bank accounts and services.

Step by step to get out

1. Stop new spending from the account until it is positive again, even if that means a few tight days.
2. Call your bank and ask for a fee refund. Many banks waive one or two fees, especially for long-time customers.
3. Turn on low-balance alerts in the app, so you know before you go negative, not after.
4. Move bills to the days after payday, so autopay does not hit before your paycheck arrives.
5. If you live in the red every month, it is a budget problem, not a timing problem. See small expenses that add up.

Swap it for something cheaper, carefully

Payday loans and cash advance apps can look like a fix, but their fees often add up to a very high effective rate. If you need a short-term bridge, a small loan from a credit union is usually much cheaper. Above all, build even a small cushion: a few hundred dollars in savings is enough to stop most overdraft fees. See how to build an emergency fund.