Overdraft Fees vs. NSF Fees: What Are They and How Do They Differ?

Banks charge overdraft fees and NSF fees when your bank account is overdrawn, but they’re not the same.

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Updated May 13, 2024
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An overdraft fee occurs if your bank approves a transaction that overdraws your account’s balance. The bank covers the overdrawn amount; you must pay back the loaned amount plus an overdraft fee.

A non-sufficient funds (NSF) fee occurs if your bank denies a transaction that would overdraw your account. You would then have to pay an NSF fee.

If your bank charges you an overdraft or NSF fee, you could ask the bank to waive it. Some financial institutions might be willing to waive these fees, especially if it’s your first time getting them.

In this article

Key takeaways

  • The difference between overdraft and NSF fees is that overdraft fees occur when a bank approves a transaction that overdraws your account. NSF fees occur when a bank denies a transaction that would overdraw your account.
  • If you incur an overdraft or NSF fee from your bank, you could contact customer service and request a waiver or refund. However, keep in mind that this isn’t guaranteed and depends on the bank’s policies.
  • Overdraft fees and NSF fees vary by financial institution but can range from $10 to $36 per charge.
  • Overdraft fees are generally more common than NSF fees because many banks and credit unions have eliminated NSF fees from their fee schedules.

Compare overdraft fees vs. NSF fees

Potential cost Transaction authorization Description
Overdraft fee $10 to $36 Approved The bank allows a transaction that would overdraft your account, covers the overdraft amount, and charges you a fee. You have to pay back the fee and the money loaned from the bank.
NSF fee $10 to $36 Denied The bank denies a transaction that would overdraft your account and then charges you a fee. You have to pay back the fee and might have to deal with a bounced check or another form of denied payment.

What is an overdraft fee?

A bank charges an overdraft fee if you don’t have enough money in your account to cover a transaction, but the bank pays for it anyway. After an overdraft fee is charged, you would be on the hook to pay back the fee and the amount the bank loaned you to cover the transaction.

For example, you could have $50 in your bank account and make a $75 debit card purchase to pay a utility bill. The bank could cover the $25 overdraft and then charge you a $35 overdraft fee. You would be expected to repay the $25 loaned amount plus the $35 charge.

Learn more about how overdraft fees work.

How much is an overdraft fee?

Overdraft fees vary by bank, but they could cost around $35 per transaction. Here are some overdraft fee amounts from popular banks:

  • Bank of America: $10
  • Capital One: Doesn’t charge overdraft fees
  • Chase: $34
  • Citi: Doesn’t charge overdraft fees
  • U.S. Bank: $36
  • Wells Fargo: $35

What is an NSF fee?

The bank charges you an NSF (non-sufficient fund) fee if it denies a transaction that would overdraw your account. This differs from an overdraft fee, which is charged when a bank approves and pays for a transaction that would overdraw your account.

Using the same example above, you could have $50 in your bank account and make a $75 debit card transaction to cover a utility bill. The bank denies the transaction because it would overdraw your account and then charges you an NSF fee.

How much is an NSF fee?

NSF fees have largely been eliminated from major banks. According to 2023 data from the Consumer Financial Protection Bureau (CFPB), almost two-thirds of banks with over $10 billion in assets have eliminated NSF fees. However, most credit unions of a similar size continue to charge NSF fees.

Here are some NSF fee amounts from different financial institutions:

  • Bank of Hawaii: $30
  • BECU: $10
  • First Community Bank: $36
  • Navy Federal Credit Union: $29
  • PenFed Credit Union: $30
  • State Employees’ Credit Union: $12 (after NSF Fee Free Days are exhausted)

How to waive overdraft and NSF fees

If your bank charges you an overdraft or an NSF fee, you could try to get it waived. While there’s no guarantee that your bank will approve your request, there’s no harm in trying.

Waiving overdraft fees

Some financial institutions might be willing to waive overdraft fees, especially if this is the first time you’ve received them.

Here are some steps you can take to waive overdraft fees:

  • Contact your bank: Reach out to your bank’s customer service via phone, email, or in-person. Explain your situation and ask if they can waive the fee.
  • First-time forgiveness: If this is your first time incurring an overdraft fee, mention this to your bank. Many banks are willing to waive the fee for first-time occurrences.
  • Enroll in overdraft protection: Some banks offer overdraft protection programs that link your bank account to another account to cover any overdrafts.

Waiving NSF Fees

Like overdraft fees, you can request your bank waive NSF fees.

Here are some steps you can take to waive NSF fees:

  • Contact your bank: As with overdraft fees, the first step is to contact your bank. Explain why what happened and ask if they can waive the NSF fee.
  • First-time forgiveness: If this is your first time incurring an NSF fee, mention this to your bank. They may be willing to waive the fee as a one-time courtesy.
  • Maintain a balance in your account: Keeping a balance in your account can help prevent NSF fees.

How to avoid overdraft and NSF fees

The Consumer Financial Protection Bureau proposed a rule that could overhaul overdraft fees in the future. While we wait to see how that pans out, consider these tips to learn how to avoid overdraft fees and NSF fees.

1. Monitor your account regularly

One of the best ways to stay on top of your personal finances is to always know what’s going on with your money. If you frequently check your account balances and know your spending and income amounts, you’ll unlikely overdraw an account.

You can monitor your finances in multiple ways, including using budgeting apps or simply logging in to the online account associated with your bank.

2. Set up alerts for low balances

Many financial institutions provide notification and alert options for different things. For example, you can receive an email or text message if your account balance gets low. In some cases, you can choose how low you want the balance to be before you receive a notification.

These types of alerts can help you monitor your account activity. If you receive an alert, you can hold off on certain transactions until you deposit more money into your account.

3. Opt for overdraft protection plans

Some banks offer optional overdraft protection programs that you can enroll in. The terms can vary by bank, but many programs cover transactions that would overdraw your account and charge you an overdraft fee. You then have to pay back the fee and the loaned amount.

If you don’t enroll in some of these programs, the bank will simply reject transactions that could overdraw your account, and you won’t be charged an overdraft fee. Depending on the program, this could be the safer option. But you might still be charged an NSF fee.

Certain protection plans could also link multiple bank accounts together to lower the chances of one account being overdrawn. For example, you can link a savings account to a checking account. If your checking account were to be overdrawn, the necessary funds could be transferred over from your savings account (if there are funds available).

This plan could prevent your accounts from being overdrawn, which would help you avoid overdraft and NSF fees.

4. Understand your bank's fee structure and policies

Not all banks charge overdraft fees. Similarly, not all banks charge NSF fees. Some banks don’t charge overdraft or NSF fees. Some banks charge both.

Also, some banks have overdraft protection plans, while others don’t. And the terms between different plans can vary.

Considering each financial institution's differences, it makes sense to research a bank or credit union and its fees before deciding to bank with them. Even if a bank charges overdraft fees, it might only have the option to charge them if you enroll in its overdraft protection program.

It can get confusing, but most banks have fee schedules you can find online that list all their different fees. You can also look up specific bank accounts to find their fees.

If you still incur an overdraft fee after researching and being as careful as possible, it’s not the end of the world. In some cases, fees can be waived.

Learn more about how to waive overdraft fees.

Overdraft fees vs. NSF fees FAQ

Will a check bounce or overdraft?

Without enough funds and overdraft protection, your check may bounce. This could result in a fee for a returned check or insufficient funds. However, if you have overdraft protection, your bank might cover the check based on its balance, which would incur an overdraft fee. You would then be responsible for repaying both the fee and the amount advanced by the bank.

What is an example of an NSF fee?

Your bank may charge an NSF fee if you don’t have enough money in your account to cover a payment and your bank denies the transaction. For example, you write a check for $1,000 to cover your rent, but you only have $800 in your account when your landlord tries to cash the check. Keep in mind that many banks removed NSF fees from their fee schedule, so make sure to review your bank policies and fees.

Why am I being charged an NSF fee?

NSF fees are commonly charged if your bank account doesn’t have enough funds to cover a transaction and your bank denies the transaction. The denied transaction could cause a check to bounce or an electronic payment, such as to a utility company, to be rejected. If this is your first time getting charged an NSF fee, you could try calling your bank and negotiating waiving the fee.

Overdraft fees vs. NSF fees: bottom line

The primary difference between overdraft and NSF fees is that overdraft fees occur when your bank approves a transaction that overdraws your account by covering the overdrawn amount, while NSF fees occur when your bank denies a transaction that would otherwise overdraw your account.

You can avoid both fees by carefully monitoring your account and making sure you don’t initiate any transactions that could overdraw your account balance. You can also set up low-balance alerts and learn how your bank’s fees work.

It’s also possible to find banks that don’t charge NSF or overdraft fees. To learn more, check out our list of the best banks.

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Author Details

Ben Walker, CEPF, CFEI®

Ben Walker, CEPF, CFEI®, is credit cards specialist. For over a decade, he's leveraged credit card points and miles to travel the world. His expertise extends to other areas of personal finance — including loans, insurance, investing, and real estate — and you can find his insights on The Washington Post, Debt.com, Yahoo! Finance, and Fox Business.