Overdraft and NSF fees
Bank fees for payments that exceed your balance: an overdraft fee when the bank pays anyway, an NSF fee when it declines. Some are challenged in class actions.
Also called: overdraft fee, NSF fee, non-sufficient funds fee
Bank fees for payments that exceed your balance: an overdraft fee when the bank pays anyway, an NSF fee when it declines. Some are challenged in class actions.
What it means
An overdraft fee is what a bank charges when it pays a transaction that is bigger than your balance. A non-sufficient funds (NSF) fee is what a bank charges when it declines or returns a payment because the money is not there. The two fees are often the same amount, and a merchant may add its own returned-item fee.
Under the CFPB's Regulation E, you must opt in before a bank can charge an overdraft fee on an ATM withdrawal or a one-time debit card purchase. You can revoke that choice at any time. The opt-in rule does not cover checks or recurring electronic payments, which can still trigger overdraft or NSF fees.
Class actions have challenged how banks charge these fees. One common claim: a bank approved a debit purchase when your balance was positive, then charged an overdraft fee when it settled after the balance had dropped. Others challenge the order in which a bank posted your transactions.
What it means for you
You may be able to get overdraft or NSF fees back in two ways. First, ask your bank to reverse a fee. Banks sometimes do this as a courtesy, especially for a first mistake. Second, check whether your bank is part of a class action settlement. Some of those payments are calculated from the bank's own records, so you may only need to confirm your account. To avoid new fees, review your overdraft opt-in settings. You can turn off coverage for debit and ATM transactions if you do not want it. Owed matches you with open fee settlements and opens the official claim form, and you submit it yourself.
Example
Say your hypothetical checking account has $20 and you buy lunch for $18 with your debit card. The bank approves it. Before the purchase posts, an automatic bill takes $15. Your balance drops below zero, and the bank charges an overdraft fee tied to the lunch purchase. A class action might claim the fee was unfair because the purchase was approved when you had enough money. If the bank settles, customers charged such fees during the class period might receive a payment based on the fees the bank's records show.
FAQ
An overdraft fee applies when the bank pays a transaction your balance cannot cover. An NSF fee applies when the bank declines or returns the payment instead. Both are often the same amount.
For one-time debit card purchases and ATM withdrawals, not unless you opted in to overdraft coverage. Checks and recurring electronic payments are different, and banks can charge overdraft or NSF fees on them without that opt-in.
Related terms
- CFPB: What can I do if my bank charged me a fee for overdrawing my account?
- 12 CFR 1005.17: Regulation E overdraft opt-in rule (Cornell LII)
Updated Oct 18, 2026. Plain-English definitions for general information — not legal or tax advice.