Yes, Bank of America allows overdrafts, but only if you set it up first
Bank of America does permit overdrafts on checking accounts, but the bank does not turn this on automatically. You have to opt in to their overdraft service, called Overdraft Protection or Overdraft Courtesy, depending on which account type you hold. Without this service active, a transaction that would take your balance negative will simply be declined at the point of sale or ATM.
The distinction matters because it changes what happens when you spend money you do not have. With overdraft protection enabled, the bank will cover the shortfall and charge you a fee. Without it, the transaction fails and you keep your money, but you also cannot complete the purchase.
Bank of America offers two separate overdraft tools, and they work differently. Understanding which one is active on your account—or whether you want to activate one at all—requires knowing what each does and what it costs.
Key Takeaways
- Bank of America requires you to opt in to overdraft protection; it is not on by default for new accounts.
- Overdraft Courtesy covers debit card purchases and ATM withdrawals but not automatic bill payments, and charges a fee per transaction.
- Overdraft Protection transfers money from a linked savings account or credit line before the overdraft fee applies, if you have one set up.
- Each overdraft transaction that the bank covers costs money, so the cheapest option is often to decline the transaction and keep your balance positive.
- You can turn overdraft protection on or off through your Bank of America online account or by calling customer service.
How Bank of America's Overdraft Courtesy works
Overdraft Courtesy is the standard overdraft service. When you make a debit card purchase or ATM withdrawal that would overdraw your account, Bank of America covers it and charges you a fee. As of 2024, that fee is $35 per transaction, though the bank has changed this amount in the past.
Overdraft Courtesy does not cover everything. It applies to debit card transactions and ATM withdrawals. It does not cover automatic bill payments, checks, or ACH transfers (the electronic transfers used for things like direct deposit or paying bills online). Those transactions will be declined if you do not have the money.
The bank will cover up to a certain number of overdrafts per day—typically up to four transactions—before stopping. This means if you overdraw five times in one day, only the first four will be covered and you will be charged four fees. The fifth will be declined.
What Overdraft Protection does differently
Overdraft Protection is a separate tool that links your checking account to another account you own—usually a savings account, but sometimes a credit line or money market account. When a transaction would overdraw your checking account, the bank automatically transfers money from the linked account to cover it.
This transfer usually happens instantly or within hours. You do not pay a fee for the transfer itself, but you may pay a transfer fee depending on your account type and how many transfers you make. Some Bank of America accounts include a set number of free transfers per month.
Overdraft Protection only works if you have a linked account with available funds. If your savings account is also empty, the protection does not trigger and the transaction will be declined. If you have both Overdraft Courtesy and Overdraft Protection active, the bank will try the transfer first, and if that fails, it will cover the transaction with Overdraft Courtesy and charge the fee.
The cost of overdrafting at Bank of America
Each overdraft covered by Overdraft Courtesy costs $35. If you overdraw four times in one day, that is $140 in fees. These fees are charged to your account immediately, which can push your balance even further negative and trigger additional overdraft fees.
Overdraft Protection avoids the per-transaction fee, but it only works if you have money in a linked account. If you use it frequently, you are moving money between your own accounts, which does not cost you directly—but it does deplete your savings. Some account types limit the number of free transfers you can make per month, after which transfers cost $10 each.
The cheapest option is to avoid overdrafting altogether by keeping a buffer in your checking account or declining transactions that would take you negative. The second-cheapest is Overdraft Protection if you have a savings account with money in it. Overdraft Courtesy is the most expensive option because each use costs $35.
How to turn overdraft protection on or off
You can manage your overdraft settings through your Bank of America online account. Log in, go to your checking account settings, and look for the overdraft or account features section. From there you can turn Overdraft Courtesy on or off. If you want to set up Overdraft Protection, you will need to link a savings account or other account first, which you can also do in the account settings menu.
If you prefer to make changes by phone, call Bank of America customer service at the number on the back of your debit card. They can turn overdraft protection on or off immediately and can help you link a savings account if you want to set up Overdraft Protection.
Changes usually take effect within one business day, though in some cases they may take longer. If you are trying to prevent an overdraft that is about to happen, calling is faster than using the website.
What happens if you overdraw without protection enabled
If you do not have Overdraft Courtesy turned on, a transaction that would take your balance negative will be declined. You will not be able to complete the purchase or withdrawal. The merchant or ATM will tell you the transaction was declined, usually without explaining why.
A declined transaction does not cost you money directly, but it can be inconvenient—especially at a checkout line or when you need cash. It also does not hurt your credit score, because it is not reported to credit bureaus. The only consequence is that you cannot spend the money.
Some people prefer this outcome because it prevents fees. Others find it embarrassing or inconvenient. The choice is yours to make when you set up your account or change your settings later.
Overdraft fees and your account history
Bank of America tracks overdraft fees in your account history. If you overdraw frequently, the bank may contact you or restrict your account. In rare cases, repeated overdrafts can lead to account closure, though this is uncommon.
Overdraft fees do not appear on your credit report and do not affect your credit score. They are an internal bank matter. However, if you overdraw and do not bring your balance positive within a certain time, the bank may report the account to ChexSystems, a banking history database that other banks use when you apply for new accounts.
Staying positive on your balance is the simplest way to avoid this situation entirely. If you do overdraw, paying the balance back as soon as possible limits the damage.
Frequently Asked Questions
Can Bank of America overdraft my account without my permission?
No. Bank of America does not enable overdraft protection on new accounts by default. You must opt in to Overdraft Courtesy or set up Overdraft Protection yourself. If neither is active, transactions that would overdraw your account will be declined.
Does overdrafting hurt my credit score?
Overdraft fees themselves do not appear on your credit report and do not affect your credit score. However, if you leave your account overdrawn for an extended period without paying it back, the bank may report it to ChexSystems, which can make it harder to open accounts at other banks.
Can I overdraft with a debit card at stores other than Bank of America?
Yes. Your Bank of America debit card can overdraw your account at any merchant or ATM, as long as Overdraft Courtesy is turned on. The $35 fee applies regardless of where you use the card.
What is the difference between Overdraft Courtesy and Overdraft Protection?
Overdraft Courtesy charges a $35 fee each time the bank covers a transaction. Overdraft Protection transfers money from a linked account instead, avoiding the fee but requiring you to have money in another account. Overdraft Protection is cheaper if you have savings available.
Can I set a limit on how much I can overdraft?
Bank of America does not let you set a personal overdraft limit. The bank limits overdrafts to four covered transactions per day, after which additional transactions are declined. You can turn overdraft protection off entirely to prevent overdrafts, but you cannot set a custom dollar limit.