How to avoid overdraft and NSF fees

US: the opt in rule

• For ATM and one time debit card transactions, banks cannot charge an overdraft fee unless you opted in.
• If you are not opted in, those purchases are usually declined when money is short, with no overdraft fee.
• Checks and recurring electronic payments can still bring overdraft fees even if you never opted in. Some banks let you opt out of those too, but you may get an NSF fee instead, often the same amount.
• The CFPB says many banks and credit unions charge $30 or more per overdraft, and some charge an extra fee if you do not repay within a few days.

To stop debit and ATM overdraft fees, tell your bank you no longer want overdraft coverage. You can do it at any time.

US: cheaper ways to cover a short balance

The CFPB lists these options:

1. Link checking to savings so a shortfall moves over. There may be a transfer fee, but less than an overdraft fee.
2. Ask about a line of credit or linking a credit card. You pay interest, but it can cost less for a brief gap.
3. Opt out of debit and ATM overdraft coverage so purchases decline instead.

Canada: the $10 NSF cap

Since March 12, 2026, federally regulated banks in Canada:

• cannot charge more than $10 in NSF fees when you do not have enough money for a payment
• cannot charge an NSF fee more than once in 2 business days on the same personal account
• cannot charge an NSF fee when you are overdrawn by less than $10

Before the cap, NSF fees typically ran $45 to $48, according to the Financial Consumer Agency of Canada. Banks must also send a low balance e-alert, with $100 as the default threshold. You can change the amount, so set it where it actually warns you.

Charged anyway? What to do

1. Find the fee on your statement and the payment that caused it.
2. Call your bank and ask for a refund. Ask what fee schedule it was charged under.
3. In the US, if a debit or ATM overdraft fee was charged and you never opted in, say so clearly.
4. In Canada, check the fee against the $10 cap and the 2 business day rule.

FAQ

Can I turn off overdraft fees in the US? For ATM and one time debit card purchases, yes. Tell your bank you do not want overdraft coverage. Checks and recurring payments follow different rules.

What is the NSF fee limit in Canada? $10 at federally regulated banks since March 12, 2026, and no more than once in 2 business days on the same account.

Is an NSF fee the same as an overdraft fee? No. With overdraft, the bank pays the item and charges you. With NSF, the payment is returned and you can still be charged.

Can I get an overdraft fee refunded? You can ask. Call your bank, point to the charge and ask for it back.