Checking Account Overdraft

23 Pages Posted: 27 Nov 2018 Last revised: 25 Jul 2022

See all articles by Eva Nagypal

Eva Nagypal

Consumer Financial Protection Bureau

Trevor Bakker

Stanford University, Department of Economics, Students

Nicole Kelly


Jesse Leary


Date Written: July 1, 2014


In this Data Point we present the results of several analyses of consumers’ experiences with overdrafts at a number of large banks. In many instances we break down our results by an account holder’s status under Regulation E requirements (also known as “opt-in status”). This refers to the 2009 Federal Reserve Board amendment to Regulation E, subsequently recodified by the CFPB, that generally requires financial institutions to obtain affirmative consent from account holders (“opt-in”) to be charged fees for overdraft coverage on automated teller machine (ATM) and non-recurring point of sale (POS) debit card transactions. This has the practical effect of institutions being less likely to authorize overdrafts on these types of transactions for account holders who have not opted in. This change became effective for new accounts on July 1, 2010, and for existing accounts on August 15, 2010.

Key findings of this report with respect to the banks studied include:

• Overdraft and non-sufficient funds (NSF) fees constitute the majority of the total checking account fees that consumers incur. For opted-in consumers, overdraft and NSF fees account for about 75 percent of their total checking account fees and average over $250 per year.

• Most overdraft fees are paid by a small fraction of bank customers: eight percent of customers incur nearly 75 percent of all overdraft fees.

• The propensity to overdraft generally declines with account holder age, with 10.7 percent of the 18-25 age group having more than 10 overdrafts per year, but only 2.8 percent of the 62 and over age group falling into this category.

• The number of overdraft transactions and fees varies substantially with opt-in status. Opted-in accounts are three times as likely to have more than 10 overdrafts per year as accounts that are not opted in. Opted-in accounts have seven times as many overdrafts that result in fees as accounts that are not opted in. Disentangling the causal nature of the relationship between opt-in status and overdrafting would require further analysis.

• Transactions that lead to overdrafts are often quite small. In the case of debit card transactions, the median amount that leads to an overdraft fee is $24 and the median amount of a transaction that leads to an overdraft fee for all types of debits is $50.

• Most consumers who overdraft bring their accounts positive quickly, with more than half becoming positive within three days and 76 percent within one week.

Note: This is another in an occasional series of publications from the Bureau of Consumer Financial Protection’s Office of Research. These publications are intended to further the Bureau’s objective of providing an evidence-based perspective on consumer financial markets, consumer behavior, and regulations to inform the public discourse.

Suggested Citation

Nagypal, Eva and Bakker, Trevor and Kelly, Nicole and Leary, Jesse, Checking Account Overdraft (July 1, 2014). Consumer Financial Protection Bureau Office of Research Reports Series No. 14-4, Available at SSRN:

Eva Nagypal

Consumer Financial Protection Bureau ( email )

United States

Trevor Bakker (Contact Author)

Stanford University, Department of Economics, Students ( email )

Stanford, CA
United States

Nicole Kelly


Jesse Leary


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