What Is an Overdraft Fee?

Overdraft fees are common and costly. We’re breaking down the facts about them so you’ll have the information you need to avoid them.

3 min read

No one likes getting hit with hidden fees, and one of the best ways to avoid them is by understanding why they happen. Overdraft fees are very common and can add up, often coming seemingly out of nowhere. N26 never charges hidden fees, including  overdraft fees. However, we want you to be aware of these sneaky charges so that you can avoid them in the future, no matter where you choose to bank.

So what is an overdraft fee? When you make a debit card purchase that exceeds the amount of money you have in your account, some banks may agree to cover the missing amount — and charge you an overdraft fee for doing so. This situation also applies to ATM withdrawals and checks, and many times banks charge a separate fee for every transaction.

Overdraft fees are different from returned item fees, although they both start with the same situation: You’re trying to spend more money than you have in your account.

  • If your bank covers the missing amount so that you can still make the purchase, you might be charged an overdraft fee.

  • If your bank doesn’t pay the missing amount, and the purchase is declined, you might be charged a returned item fee.

How much is an overdraft fee?

According to ValuePenguin, overdraft fees typically cost around $35 per charge. Be careful, since you can be charged a separate fee for each transaction you attempt, including every debit card purchase, check, or ATM withdrawal. You may also be charged a new fee each day that your account stays overdrawn. 

How does an overdraft fee affect me?

Recurring overdraft fees don’t just cost you a fortune, they can also lead to long-term debt. If your account has a negative balance for an extended period, your bank could send your information to a collection agency.

How can I avoid overdraft fees?

  • Tip #1: Choose a bank that doesn’t charge overdraft fees. You may be wondering how to get overdraft fees waived or refunded, which might be possible if you jump through enough hoops. But the best advice we can give is choosing an account that doesn’t charge overdraft fees in the first place.

  • Tip #2: Save for unexpected emergencies. Unexpected expenses are part of life, but they don’t have to derail your financial plans. Start an emergency fund so that you can manage emergencies without overdrawing your account.  

  • Tip #3: Keep track of your accounts. Most overdrafts happen when you don’t pay attention to how much money you have in your account.  With the N26 app you can easily keep track of your spending and balance, right from your phone. You’ll also receive instant alerts on all account activity to give you peace of mind. 


No. Hidden. Fees.

 Overdraft fees are expensive, stressful, and can put you in a bad financial situation — but you can forget about them completely with an N26 account. At N26, you won’t have to worry about overdraft fees, monthly maintenance charges, minimum balance fees, or foreign transaction fees. We believe that banking should be transparent, and we’re here to empower you with the knowledge that you need to reach your financial goals. Sign up today with N26 in under 5 minutes to experience banking the world loves.

N26 does not manage external links, and is not responsible for the content, links, products or services of these websites. Further, N26's privacy and security policies do not apply to external linked websites. Please consult the disclosures of any external linked websites for further information.

The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.

By N26

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