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In your financial life, overdrafting your bank account is bad enough; no one likes to feel as if they’ve run out of money. But being charged an overdraft fee can dig you even deeper into the hole.

That’s why it can make sense to take some simple steps to avoid overdraft fees. You may be able to get a reprieve by contacting your bank or by linking accounts, among other moves.

In this guide, you’ll learn more about overdrafting and the charges involved, plus smart ideas for how to avoid overdraft fees.

What Is an Overdraft Fee?

If you pay out more than is in your bank account when writing a check, using your debit card, or making an electronic bill payment, your bank may go ahead and process the payment you’ve initiated, leaving you with a negative balance.

The bank will likely charge you for the privilege of letting you spend more than you have, and that is an overdraft fee.

How Much Do Overdraft Fees Cost?

Overdraft fees aren’t cheap. The cost can vary somewhat depending on the bank or financial institution, with the current average being $26.77 according to survey data. However, the fee can be as high as $30 to $35.

It’s important to note that the overdraft fee is generally per overdraft. So if you overdraft your account and don’t realize you overdrafted, you might make multiple purchases and incur a separate fee on each one.

And these fees can add up quickly. At almost $27 a pop, just three small purchases could set you back over $75. That’s why it’s helpful to learn how to get rid of overdraft fees.

Some banks may also charge extended overdraft fees (sometimes called continuous or sustained fees) if your account doesn’t go back into positive territory within a few days.

In 2024, Americans paid $12.1 billion in overdraft and related non-sufficient funds (NSF) fees each year. However, some banks are beginning to lower their overdraft fees. Other financial institutions don’t charge any fees for the first $50 of overdraft, which is the SoFi overdraft limit, for example.

8 Smart Ways to Avoid Overdraft Fees

If your bank does charge an overdraft fee, you’ll want to make sure there’s enough money in your account so that you don’t spend more than you have. These strategies can help you avoid overdraft fees.

1. Monitor Your Account Balance Regularly

How often do you monitor your balance? It’s a good idea to make a habit of checking your accounts weekly or even more frequently to make sure your balances aren’t too low.

This can be done quickly online, via mobile app, when you withdraw money from the ATM, and/or by calling the bank and getting an automated update on your account.

One simple way to avoid overdraft fees is to keep a cash cushion in your checking account. A cushion means you have a little more stashed in your account than you typically spend each month in order to cover unexpected or forgotten charges.

This cash cushion can help prevent overdraft. You might even add it as an item on your budget to make sure it gets replenished if you use it up.

2. Set up Low Balance Alerts

An easy way to help avoid unexpected overdrafts, plus possible overdraft fees, is to set up some automatic alerts.

•   One that is particularly helpful is a low balance alert, which means you will be notified (by text, email, or cell phone notification) whenever your balance falls below a certain amount.

You could then immediately transfer money from savings, make a mobile deposit into your account, or hold off on making any purchases until another paycheck comes in.

•   Another useful alert you may be able to set up is the overdraft alert. This means you would be notified whenever you overdraft your account.

This alert won’t help you avoid the initial overdraft fee, but it could stop you from continuing to make purchases and incurring more overdraft fees.

3. Understand and Manage Overdraft Coverage

Customers typically have to “opt-in” to a bank’s overdraft coverage program, which many do without thinking much about it when they open their accounts.

This gives the institution permission to clear a transaction even if there is not enough money to cover it in the account by essentially loaning you the money. They may then charge you a fee for this service. You can opt out of overdraft coverage. Once you do this, any purchase you make that you don’t have money in your account to pay for will be declined without a fee.

If you’re unsure about whether you’re enrolled in an overdraft program when you opened your account, you can contact your bank to find out whether you have this coverage or not.

Keep in mind, though, that opting out of overdraft coverage programs typically does not protect you from fees charged for bounced checks.

4. Link Your Checking to a Savings Account

Next on the list of how to avoid overdraft fees: Connect your accounts for overdraft protection.

Overdraft protection service is different from overdraft coverage. This service, which typically involves signing a contract to set up, will link your checking account to another account at the same institution.

Then, in the event that there’s not enough cash in your checking account to cover a transaction, the needed money would be transferred from the linked account to cover it. Some banks may charge a fee for the funds transfer, but these charges are typically lower than overdraft fees. Other banks offer overdraft protection transfers for free.

It’s important to remember, however, that some savings accounts have a limit of six withdrawals per month. If you go over the limit you could be charged an excessive transaction fee.

Recommended: How to Make Money From Home

5. Manage Your Autopay and Bill Pay Dates

It’s a good idea to check when monthly payments are due, and see how that dovetails (or doesn’t) with your paycheck schedule. For instance, you might be more likely to overdraft your account if your credit card payment is due a couple of days before your paycheck hits. If that’s the case, you might try contacting your credit card issuer and see if they could move your due date slightly to better accommodate your cash flow. Many companies will do that for you.

Check the autopay dates for all your bills to make sure you’ll have enough in your account to cover them.

6. Use a Modern Mobile Banking App

Another way to avoid overdraft fees is to use a mobile bank app, which can let you see your account balance, pending payments, and spending in one quick glance at your mobile device.

Mobile banking can make it easy to eyeball how your money looks so you can avoid overspending. You can check your balance on the app before you make purchases in stores or online to make sure you have sufficient funds in your account.

7. Use Direct Deposit to Your Advantage

When you enroll in direct deposit for your paychecks, you’ll generally get your money faster since it’s directly deposited into your account by your employer. You’ll also know exactly when the money will be deposited into the account — typically on every pay day, which might be bi-weekly. Otherwise, if you have an actual paper check to deposit, you have to take it to the bank, which can be inconvenient and time consuming. It also usually takes a few days for the check to clear and the money to be available to you.

Not only that, at some banks, if you have direct deposit, you can get paid up to two days early.

It’s possible to use direct deposit for other payments as well, such as tax refunds and Social Security payments.

8. Switch to a Bank With No Overdraft Fees

Banks are recognizing that overdraft fees can be a pain point for consumers. In fact, in a 2024 SoFi Banking survey, 57% of respondents said overdraft protection is an important feature in a bank account.

Some banks are now providing fee-free overdraft coverage. This may be limited to a certain amount, such as covering the first $50 of an overdraft, as mentioned earlier. It may also require the customer to get back to a positive balance within a certain period of time (say, until your next direct deposit hits).

It can be wise to shop around for this feature and check online vs. traditional banks for it.

What to Do If You’ve Already Been Charged an Overdraft Fee

If you’ve overdrawn your account, here are some steps to take to help avoid overdraft fees or limit them:

•  The best first action is generally to transfer money into the account right away. You might still be able to prevent an overdraft fee.

You can check to see if your provider has a daily cutoff time or deadline for adding money to an account to correct a negative balance that same day to avoid fees.

Even if you miss the cutoff, transferring money into the account quickly can prevent other fees. That’s because leaving a balance negative for several days can sometimes result in an extended overdraft fee.

•  If you are charged an overdraft fee, however, that doesn’t automatically mean you are stuck paying it. It doesn’t hurt to negotiate with the institution to try to have the fee reimbursed.

You can try to get overdraft fees waived by calling the bank and politely asking if they will remove the charge — if it’s your first offense, you might prevail. You may also want to ask your bank if it has a forgiveness program. Some institutions have policies to waive the first fee charged each year or if a customer is experiencing economic hardship.

How to Avoid an Overdraft Fee at the Checkout

One helpful habit to try: When you’re at the checkout about to make a purchase, first make sure you have enough money in your bank account before you proceed with the transaction. Here’s how.

•  Use your mobile banking app to get an instant balance check on your account (many banking apps offer this feature). That way you can see at a glance if your purchase will be covered.

•  Know your current balance vs. your available balance. There may be deposits or other transactions still pending in your current balance, which could affect what you have available to spend. Focus on the available balance of your account.

•  When using a debit card to make a purchase online, an item may be on back order, and your card might not be charged until the item ships. It can be easy to forget about it and then not have enough funds in your account to cover it when the item does ship. To avoid an overdraft, make a note about delayed charge in your transaction register. You can also set a reminder on your phone to check on the item and the money in your account.

The Takeaway

There are a few simple ways to avoid overdraft fees, such as opting out of overdraft coverage, setting up an automatic low-balance alert, linking your accounts, keeping a little cash cushion in your account, or banking where you get a level of no-fee overdraft coverage.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Can I get an overdraft fee refunded?

It may be possible to get an overdraft fee refunded. Call the bank and ask if they will refund the fee. If it’s the first time you’ve ever overdrafted your account, they might give you a refund. Some banks even have policies to waive the fee in certain situations — such as if a customer is facing economic hardship. So if there was an extenuating circumstance, be sure to explain it. But no matter what the circumstances, it doesn’t hurt to ask politely for a refund.

Is it better to turn off overdraft protection?

You may want to opt out of overdraft coverage, which is different from overdraft protection, which usually triggers a fee. Overdraft protection, on the other hand, typically links your checking account to another account at the same bank and if there’s not enough cash in your checking account to cover a transaction, the needed money would be transferred to cover it. Some banks charge a fee for these transfers, others don’t.

Do overdraft fees affect my credit score?

Overdraft fees generally don’t affect your credit score because your checking account activity is not typically reported to the credit bureaus. However, if you overdraft the account and don’t pay the overdraft and any fees incurred, the bank could send the debt you owe to collections. The collection agency can then report the debt to the credit bureaus which can negatively impact your credit score.

How long do I have to pay an overdraft?

How long you have to pay an overdraft is determined by your bank. Some institutions may give you just a day to cover the overdrawn amount plus any fees, others may give you one or two days. It’s important to find out what your bank’s specific policy is, and then follow it to avoid further negative consequences.

What’s the difference between overdraft protection and overdraft coverage?

Overdraft coverage is a service that gives your bank permission to clear a transaction even if there is not enough money in the account to cover it by essentially fronting you the money. They may then charge you a fee for doing so. Overdraft protection, on the other hand, usually links your checking account to another account at the same bank. If there’s not enough cash in your checking account to cover a transaction, the funds would be transferred to cover it. Some banks offer these transfers free of charge.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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SOBNK-Q425-005

Smart money habits can start you on the path to achieving financial success and realizing your dreams. Adopting small (and repeated) changes in behavior can be one way to start building good financial habits that can last a lifetime. Whether your goals are near-term and relatively small (say, hosting an amazing 30th birthday for your partner) or considerably grander (retiring by age 50), planning and discipline are needed to reach them.

Read on to learn six of the most important money habits that can help steer you to financial success and realizing your money goals.

Why Good Money Habits Matter

Good money habits can set you up for financial success. They act like guardrails, keeping you moving towards positives (like an impressive retirement fund) and away from potential challenges (say, too much credit card debt). They are, in fact, similar to other wise habits in your life, whether that means eating well, exercising regularly, not staying up too late watching Netflix, or remembering to call your folks often.

Yes, good habits can require some time and energy to establish, and then you likely need to maintain focus to stay on track. Some will become second nature or no-brainers; others may require more ongoing effort. But by sticking with them, good money habits can guide you to help manage your personal finances well, make smart decisions with your funds, and achieve your future goals.

6 Good Money Habits to Adopt

Here’s a closer look at six key money habits that can help you develop financial success.

1. Set Financial Goals

Formulating your financial goals can be an important step. Goals can guide you as you go about building a financial plan for the years ahead.

One person’s goals might be to pay off their student loans and save for a down payment on a house; another might want to sock away enough cash in an online bank account to start their own business down the road; and yet another might want to achieve a lifestyle where they can pay for their child’s college education and take ski vacations every winter.

Putting pen to paper or opening a document on your laptop can be a helpful way to focus and define specific financial goals to work towards. This can give you clarity and boost your motivation vs. simply saving in the abstract.

Once you have goals in mind, you can begin saving toward them and tracking your progress.

2. Budget Well and Track Your Spending

If you are just winging it in terms of your finances, it’s probably wise to prioritize setting up a budget. The word “budget” can cause a knee-jerk reaction because it smacks of deprivation (as in, no more lattes, ever!) but that’s not what it’s about.

Rather, a budget involves understanding how much money you have coming in and where it’s going (typically towards spending and saving). It can help you be more aware of your finances and balance them, too.

Out of the various techniques, the 50/30/20 budget rule is a popular option. It spells out that 50% of your take-home pay goes towards your needs (housing, food, and healthcare, for instance), 30% towards your wants (dining out, those lattes mentioned above, travel), and 20% towards savings.

There are plenty of other different budgeting methods to try and tools you can use to track your spending, which is an important facet of good budgeting. Your bank may even offer a convenient system for this. By tracking your spending, you can see where you may be spending too much (say, your once-a-week takeout habit has crept up to four times a week), be more mindful with money, and optimize your finances. Perhaps you can put more towards debt payments, for example, than you realized.

It can also be wise to get in the habit of checking in with your money regularly; many people find that a couple of times a week is a good frequency.

3. Consolidate Debt

As you work on your budget, you may want to cultivate another money habit to develop financial success. That involves dealing with debt.

This might mean paying off credit card balances in full and making all other necessary debt payments on time, such as mortgage installments and student loan payments. Calendar reminders can help ensure that all payments get made on time, as can automating your payments (more on that below). It may even help to arrange to have all payments due on the same day. Some lenders are willing to move a monthly due date.

If you have student loan debt, you might look into refinancing options. You might, say, be able to lower your monthly payment, though that could extend the term of your loan and cost you more in interest over the life of the loan. However, doing so may be the right move for some people. (Also keep in mind that if you refinance federal loans as private student loans you will lose access to federal benefits and protections.)

Facing and managing your debt is an important step, regardless of the specific solution you decide upon. It’s a habit that allows you to take control of your money. And it can keep your debt-to-income ratio low, which can be an important factor when you want to borrow money at as low a rate as possible.

4. Know When to Consider Balance Transfer vs. Personal Loans

Building on the idea of consolidating debt is the next financial habit. This one involves knowing the warning signs when your debt is getting uncomfortably high and then taking steps to rein it in.

Sometimes, the steps above aren’t enough. If that’s the case, it’s wise to consider your options vs. taking a wait and see approach. Currently, credit card interest rates are over 20% which can be hard for some people to pay off.

So if you see your balance rising to a level you are worried about, consider the following options as you take control of your debt:

•   You might try a balance-transfer credit card, which can give you a reprieve from high interest accruing for a period of time (often 18 months), allowing you to pay down your debt.

•   You might consider taking out a personal loan and using those funds to pay off your credit card debt. The goal here is to have a lower monthly payment on the personal loan than what your credit card bill amounted to.

•   Contact a nonprofit credit counseling service, such as the National Foundation for Credit Counseling, or nfcc.org.

Getting in this habit before debt gets deeper can help you in the long run.

5. Automate Your Finances

It can be a good idea to save money right after getting paid — before the cash sits in checking long enough to spark the urge to spend it. So why not make it simple and save automatically upfront?

A person interested in saving might begin by automating just one kind of transaction. For example, they may opt to have $50 moved from a checking account to a high-yield savings account each month. If that money remains unspent each month, those monthly automatic savings would total to $600 at the end of the year.

That could be a good way to start an emergency fund without expending much effort. You can also automate payments of, say, your utilities and housing costs or your car loan. Paying bills on time this way can help build your credit.

There are also numerous ways to automate your investments. A workplace plan, like a 401(k), may already be doing this. For someone who’s on their own, mutual funds can make auto-investment really easy. Alternatively, a robo-advisor service can automatically invest contributions on behalf of the investor. (Note: This automation may be challenging for those paid irregularly, such as freelancers and seasonal workers.)

By embracing automation, you can nail an important money habit. You can pay yourself first and stash cash away in savings. And you can avoid such bad money habits as not saving enough, paying bills late, or forgetting to pay them at all.

Recommended: Emergency Fund Calculator

6. Investing Early and Often

“I invested too much money for retirement,” said no one, ever. Arguably, there’s no other financial goal that requires more habitual action — spread over decades — than saving and investing for retirement.

It can be tempting to push off planning for retirement until tomorrow. After all, when someone’s in their 20s or 30s, retirement is likely decades and decades away. Psychologically, it’s simple to presume that it’s just not worth thinking about in the now.

But, for many, retirement can be one of life’s biggest and most important expenses. It can secure your comfortable future. Investing early, often, and wisely, can help accomplish that goal.

Adopting this habit ASAP can be a big help; it allows for more time for money to grow via compounding. Compound returns are earnings on both the original amount invested (the principal) and the money earned via investing (the profit). The more months (or years) a person invests, the higher the potential for profits to compound. Note: It is important to note that all investing carries risk as the stock market can fluctuate.

Being consistent about moving money into your portfolio is important, too. Luckily, there are easy and affordable ways to get started investing. First, open an account, like a brokerage or a retirement account. (Investing in a 401(k) also counts as investing.) Then, investors can purchase investments like stocks and funds to help achieve their goals. Or investors can use an automated investing service.

The Takeaway

Building good financial habits can be rewarding. There are more technological tools than ever to help with budgeting or expense tracking. From digital apps to automatic investing to online bank accounts, building healthy financial habits has never been more accessible.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What are money habits for financial success?

Money habits that can help you achieve financial success include setting financial goals, budgeting well, consolidating debt, considering balance transfers and personal loans, automating your finances, and investing wisely.

What is a short-term money goal?

A short-term money goal is typically one you aim to achieve in a year or less.

How do you budget well?

To budget well, track how much money you have coming in and going out, and experiment with different methods of budgeting. Many people like the 50/30/20 budget rule. Budgeting apps can also be helpful.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.