How Your Bank Handles a Shortfall, and What It Charges Per Transaction

When a payment is larger than the money available in an account, the institution may pay it and charge an overdraft fee, or decline it and charge an NSF fee. The details vary by institution. As of June 1, 2026, a federal rule that was meant to limit some overdraft charges has been overturned, so checking the fee terms matters. This scorecard focuses on overdraft and NSF fees, the charges covered by the available data.

1. Find out whether the institution charges overdraft fees, NSF fees, or both.
2. Ask how much each fee is and whether it applies per transaction.
3. Ask what happens when a payment would leave the account short: is money moved from another account, is credit extended, or is the payment declined?

1. If overdraft credit is involved, ask whether its cost is disclosed as an interest rate, also called an APR.
2. Ask whether opening an overdraft credit line is optional and whether overdrafts are paid automatically or manually.
3. Compare the answers with the institution’s written fee terms. A clear answer helps you understand the charge, but does not guarantee that a fee will never apply.

What overdraft and NSF fees mean

An overdraft fee can apply when an account does not have enough money for a transaction and the institution pays it anyway. The shortfall may be covered by moving money from another account, such as savings, or by extending overdraft credit with the institution’s own funds. Credit means the amount must be repaid, and its terms can differ from those for a transfer. The CFPB rule summary describes these different ways institutions may cover an overdraft.

An NSF, or nonsufficient funds, fee is generally associated with a payment the institution declines because the account balance is too low. An account may have both kinds of charges. That makes it useful to ask what happens to a transaction in a shortfall, rather than relying on a single label in an account description. A declined payment and a paid overdraft are different outcomes, even if both begin with the same low balance.

For example, imagine a scheduled payment arrives when the account is short by $20. The institution might transfer money from a linked account, extend credit and pay the item, or decline it. The fee and repayment consequences depend on its terms. Asking which route applies can make a fee schedule easier to interpret.

What the figures show about the cost

Banks and credit unions collected more than $12 billion in overdraft and NSF fees in 2025, according to the National Consumer Law Center (NCLC). The CFPB has put the average overdraft fee at about $35 per transaction, as reported by CNBC. That is an average, not a set price across institutions. A household’s total can be higher or lower depending on how often fees apply and the amount charged.

The same CFPB reporting says overdraft fees generated $280 billion in industry revenue since 2000. NCLC reports that about one quarter of people live in households that pay overdraft fees in a year. The burden is not evenly distributed: Black and other nonwhite households, lower-income households, and households with limited education are more likely to be affected. These figures describe a broad pattern, not what any one account holder will pay.

NCLC also found that overdraft revenue at the 20 largest banks rose 6.2% in 2025 compared with 2023, the last year the CFPB published figures. Its analysis of call report data found that, among large banks, the highest average overdraft fee revenue per account was $30 in 2025. That per-account figure is not a cap on an individual’s charges. Repeated fees can add up beyond an institutional average.

The federal rule, and what changed

The CFPB finalized an overdraft rule on December 12, 2024. It was scheduled to take effect October 1, 2025, and covered banks and credit unions with more than $10 billion in assets. Under the rule, a covered institution could have set a $5 fee for a courtesy overdraft program, which the CFPB said would cover the program’s costs, or set a fee based on its actual costs and losses. The rule analysis explains the alternatives.

The rule also addressed institutions offering overdraft credit for a profit. Among its proposed protections were a choice about opening a credit line, disclosures when opening an account, periodic statements, and a choice between automatic and manual repayment. The CFPB estimated that the rule could save a typical household that incurs overdraft fees $255 a year, and about $5 billion nationally each year, according to coverage of Congress overturning the rule.

Congress overturned the rule in 2025. The House passed a resolution largely along party lines in early April, and the Senate approved a similar measure. The rule therefore did not take effect as planned. Before the reversal, many large banks had already reduced overdraft fees, limited which transactions could trigger them, or removed the fee, so terms were not uniform even then. NCLC reports that voluntary fee reductions have since stalled and some banks have raised fees. The federal rule’s reversal does not tell you what any particular institution currently charges.

How to compare terms without guessing

Start with the institution’s current written fee information, then ask questions about anything unclear. Confirm the fee amount, whether it is charged per transaction, and whether an NSF fee can apply when a payment is declined. Ask whether an overdraft is covered by a transfer or by credit. Those details help distinguish a one-time transfer charge, if any, from credit that must be repaid under separate terms.

If the institution offers overdraft credit, ask whether the charge is disclosed as an APR, or annual percentage rate, and whether you can choose not to open the credit line. Also ask whether overdrafts are paid automatically or manually. These questions describe the terms to check; they are not a guarantee that a particular account will avoid fees.

Repeated overdraft or NSF charges are a warning sign because each new fee can add to the total. A fee increase after earlier reductions is another reason to review the current terms. Comparing credit unions can be harder: NCLC says public overdraft-revenue reporting is no longer required for them, limiting one way to compare institutions. The practical comparison is therefore the fee schedule and the answers you receive, not an assumption that every institution handles a shortfall the same way.

Keep the scope of the check clear

Overdraft and NSF fees are only part of the account-fee picture. This guide’s figures and rule discussion concern those shortfall-related charges; they do not establish current prices for monthly maintenance, ATM use, wires, or other services. Ask for the full account fee schedule if you want to review charges beyond overdrafts and declined payments. For the shortfall fees, the key details are simple to record: what triggers a charge, how much it costs, and whether the institution pays the item, moves funds, or declines it.

Please seek a professional. This article is general information, not financial, tax or insurance advice. Please seek a licensed financial, tax or insurance professional about your own situation.