By the Division of Banks

Consumer Alert: Overdrawn Accounts

Sometimes, circumstances may occur that cause consumers to unintentionally overdraw their account or fall a little short.  The Division of Banks wants consumers to be aware of the options available to avoid paying high overdraft costs.

For example, if you wrote two $100 checks ($200 total) but did not have enough money in your account to pay them, your depository institution might charge you an overdraft fee ($20-$35) for each item.  The company that you gave the check to may also charge you a fee for a returned check ($25-$35) and possibly a late fee. Your fees could be more than $80 for those two checks.

However, there are alternative products you may be able to choose from:

Overdraft line of credit with the depository institutionA loan attached to your checking account that you can access if you overdraw your account.
Link your checking account to your savings account.Funds automatically transfer from your Savings to your Checking Account when needed.
Cash Advance using a Credit CardBorrow funds through a cash advance and deposit them into your checking account


Below are the fees typically associated with each option:


Fees / Interest Rate*

Total Cost**


Overdraft line of credit (LOAN)12% APR



Linking Checking Account to Savings Account$5 Transfer Fee/transfer



Cash Advance using a Credit Card3% Cash-Advance Fee / 18% APR



   * These costs are only examples based on common bank fees and nominal interest rates.
** Cost of specified transaction only; $200 outstanding for 14 days.  There may be other fees associated with the account.

Important Points to Remember

  • Good account management will save you the most money.
  • Ask your depository institution about all the overdraft protection options they offer.  Review the options and determine which one is best for you.
  • You will be able to make a better decision if you prepare in advance.
  • You must “opt-in” to your depository institution’s overdraft protection program for ATM & debit card transactions or these transactions will not be automatically covered.

Other Resources

Massachusetts Division of Banks:
Federal Reserve Board (FRB) Consumer Alert:
Consumer Financial Protection Bureau:

Additional information may be found on the Division’s website at  Consumers may also contact the Division's Consumer Hotline at 1-800-495-BANK (2265), ext. 501 for assistance.