Personal Finance

What Is an Overdraft Fee?

An overdraft fee is a charge a bank or credit union may apply when a transaction is paid even though the account does not have enough money to cover it, leaving a negative balance. Some institutions charge a flat fee per overdraft, while others have reduced or eliminated these fees.

Overdraft vs. NSF

With an overdraft, the transaction is paid; with a non-sufficient funds (NSF) fee, the payment is declined or returned.

Overdraft Protection

Linking a savings account or line of credit can cover shortfalls automatically, sometimes for a smaller fee.

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.