Imagine checking your account balance, thinking you have a small safety net before your next payday, only to see it’s in the negative. Most of us have been there. You think you have a little cushion of cash left, only for a subscription you forgot about to swoop in or a purchase to go over what you had budgeted.
When this happens, you may have to deal with overdraft fees from your bank. With some banks charging $30–$35, these fees can quickly eat into already tight budgets and cause even more financial frustration — especially if you’re living paycheck to paycheck.
The good news is that they’re avoidable. This guide offers practical advice to help you avoid the overdraft trap.
Overdraft fees are charges from your bank that kick in when you don’t have enough money to cover debit card purchases or bills.
If you opt in for overdraft protection, your bank doesn’t decline transactions when you spend more than you have in your account. Instead, it steps in and covers the costs for you — and then charges you for the “favor” through an overdraft fee.
Overdraft fees don’t always happen because of big spending sprees. In fact, they often come from seemingly small things like:
While most overdraft fees are $35 or less, they can quickly add up to hundreds of dollars per year if your bank has to constantly step in. So it’s important to protect your finances by budgeting for every expected expense.
Money management solutions like Klover can help by giving you the tools and resources you need to make smart decisions and get out of the cycle of debt.
Overdraft fees are one of the biggest sources of income for banks: They earned $5.83 billion in 2023 from overdrafts alone. Unfortunately, this means it’s easy for people to get trapped in unending debt cycles.
Say you spend money on food and entertainment over the weekend, forgetting that you have your electric bill on autopay. When Monday rolls around, the autopay expense goes through and wipes out your account. Then come the weekend charges. Because you don’t have money in your account, your bank adds an overdraft fee to each one.
The result? You lose a chunk of your paycheck to the fees on payday and have to overdraft again just to get by until your next paycheck. This creates a vicious cycle of overdrafting, which can affect your long-term financial health.
The overdraft cycle may seem unbreakable when you’re in it. But small financial management changes and the right tools can set you free. Here’s a look at what you can do to reduce negative balances.
One of the best ways to protect yourself is to set a budget that you can stick to and monitor every expense. Use mobile banking apps to regularly check your available balance and a budget app to track spending so you don’t accidentally spend more than you have. And don’t overlook the small purchases — those $5 card swipes here and there add up to more than you might think.
Low-balance alerts are notifications sent by your bank (or budgeting app) when your account falls below a specific amount.
To set up these notifications:
The exact steps to follow will depend on your budgeting or banking app, so look for your tool’s how-to guide.
A buffer is a little extra cash you leave in your account to protect yourself. It helps protect you from forgotten or unexpected expenses, preventing your account from going into the negative.
We know what you’re thinking — keeping a buffer is easier said than done. While true, it’s not impossible. Start small and build up your limit to reach your goal amount. For example, you might increase your buffer by $10 every payday.
Just remember to keep a close eye on your account balance and stop making any unnecessary purchases if it comes too close to your buffer amount.
You may also be able to adjust your bills’ due dates to align with your paydays. While not all service providers offer this option, it doesn’t hurt to check if yours do. Just contact their customer service team (you can usually find their contact information on the back of your bills) or log in to their customer service portal and look for options for changing due dates.
A good rule of thumb is to spread out your payments throughout the month — like half around your first paycheck and the rest around your second — to avoid clearing your available funds all at once. You can also use zero-interest cash advance apps like Klover to cover gaps before payday.
While overdraft protection can be helpful when you’re in a bind, the costs often outweigh the benefits. If your bank’s or credit union’s fees are too high (or you find yourself taking advantage of overdraft protection too often), consider opting out of the program altogether. It’s better to have a purchase declined than to trap yourself in unending debt.
Most employers offer direct deposit, where they send your paycheck straight to your bank account — no paper checks or long processing times. If your company offers it, direct deposit is a great way to get your paycheck a few days sooner, and some banks give you even earlier access once they learn your payment schedule.
Some banks also offer paycheck splits to automate budgeting and savings. With this tool, you can automatically set aside part of your paycheck for savings, another part for monthly bills, and another for everyday spending. This makes it easier to stick to your budget and make sure you have money for upcoming bills.
A savings account or emergency fund can reduce your reliance on overdrafts when unexpected expenses hit. To build your emergency fund:
A cash advance is early access to money you’ve already earned but haven’t been paid yet. It can save you from the overdraft cycle by giving you spending money before your next payday.
To get a cash advance, look for a reputable app, make sure you meet the qualifications, and sign up for an account.
Here’s how a typical cash advance app works:
Cash advances are more affordable than overdraft programs and much safer than risky alternatives like title and payday loans. These loans often charge predatory fees and sky-high interest rates — some payday loans’ interest rates can be as high as 600%.
Klover is one of the best alternatives to expensive overdrafts and payday loans. We offer instant access to cash advances of up to $400 with no monthly membership fees, interest charges, late fees, or credit checks. With Klover, it’s easy to get an affordable financial rescue, right when you need it.
Access quick, affordable cash advances with Klover today.
Klover is a leading choice because it’s user-friendly, transparent, and affordable. With us, you get:
Our goal is to make financial help available to everyone, without all the additional fees that trap people in cycles of debt.
While overdraft coverage can be helpful when you’re low on funds, the fees can trap you in a cycle where you’re constantly playing catch-up. To maintain a positive balance, opt out of expensive overdraft programs, keep a small buffer in your checking account, and use cash advance apps like Klover when you're short on funds.
With Klover, you can get up to a $400 cash advance to cover bills and expenses before your next paycheck. We’re one of the best alternatives to bank overdrafts because we offer advances with zero interest, zero monthly membership requirement, and zero late fees, plus free budgeting tools to help you track and manage your money for a healthy financial future.
Ready to get out of the overdraft cycle? Download Klover today.
Different banks charge different overdraft fees. Some charge as little as $4 while others charge as much as $35 per transaction.
Sometimes, but it depends on your bank and its policies. Even when they’re available, refunds and waivers can be hard to get. You need to reach out to your bank, provide your account details, explain why you believe you deserve a refund or waiver, and wait for the bank to make its decision.
Yes and no. Alone, overdraft fees can’t directly affect your credit score. But they can impact your score if your bank sends your debt to collections.
