An overdraft happens when you spend more money than you have in your bank account, causing your balance to fall into the negative. Instead of declining the transaction, the bank covers it temporarily – essentially lending you the shortfall. 

In Singapore, overdrafts are a common part of everyday banking, especially when it comes to automatic bill payments, credit card repayments, or large purchases. If you’ve ever paid your utilities or insurance premium before your salary came in, you may have experienced an overdraft.

Most local banks – including DBS, OCBC, and UOB – offer some form of overdraft facility.

An overdraft fee is what the bank charges when your transaction exceeds your available account balance. It’s a way for the bank to recover the cost of temporarily covering your shortfall. 

In Singapore, overdrafts usually come in two forms: arranged (pre-approved) and unarranged (unexpected). They are  a common part of everyday banking, especially when it comes to automatic bill payments, credit card repayments, or large purchases. If you’ve ever paid your utilities or insurance premium before your salary came in, you may have experienced an overdraft. In that scenario, your bank let you withdraw beyond your balance to pay the bill  – but you’ll be charged interest on the overdrawn amount, and sometimes a flat fee as well.

For example, DBS account holders can utilise the overdraft facility to withdraw more money from their account than their actual balance. If a Savings Account holder needs more money than their balances, they can apply for a Personal Loan. In UOB’s case, overdrafts are charged at Prime + 4% payable on the overdrawn amount (with a minimum $10/month for local payments).

Make sure to check your bank’s terms before relying on an overdraft.

» MORE: Explore The Different Types of Credit Lines in Singapore & How You Can Use Them

Yes – generally, Singapore banks will charge you each time your balance falls below zero. That means if you have multiple transactions in the red, you could be charged multiple times. 

Most banks charge:

• A flat fee per overdraft.

• Interest on the overdrawn amount, often compounded daily.

In some cases, if your account stays negative for too long, the bank may freeze it.

These charges can stack up fast – especially if you’re not aware of your spending patterns or bank balance.

You don’t have to be stuck with hefty fees. Singapore banks offer a few ways to manage or avoid overdrafts altogether.

Personal loans or lines of credit

If you've overdrawn your account and are struggling to repay the amount – especially with interest adding up – there are structured ways to manage it in Singapore.

A personal loan allows you to consolidate your overdrawn balance into a single lump-sum repayment plan. You’ll receive a fixed amount, repayable in monthly instalments over a set term, typically at lower interest rates than ongoing overdraft charges. For example, DBS offers personal loans with competitive interest rates starting from 2.88% p.a. (EIR from 5.79% p.a.), making it a manageable way to clear a persistent overdraft balance. This option works well if you prefer predictable repayments and want to avoid the uncertainty of daily interest. 

However, due to the tight schedule of overdraft repayment, a line of credit may be a better choice. It’s a maximum credit limit you can borrow against as needed. Line of credits such as DBS Cashline or UOB CashPlus, provide flexible access to funds at lower interest rates compared to unarranged overdrafts. You can use the credit line to repay your overdraft in full, then repay the credit line at your own pace. This can be a useful strategy to regain control over your finances – just be mindful of the credit facility’s interest and fees.

Whichever option you choose, it’s worth speaking directly to your bank. Many are willing to offer temporary relief or restructuring plans, especially if you reach out early.

» MORE: Best Credit Lines in Singapore 2025 

How to opt out of coverage, and what that means

Don’t want to pay overdraft fees? You can opt out of overdraft coverage entirely.

This means if you try to make a payment and your account doesn’t have enough funds, the bank will simply decline the transaction – no fee charged. However, if it’s a scheduled payment (like a loan instalment), you may be hit with a nonsufficient funds (NSF) fee instead.

While banks can cover the shortfall, fees or interest charges may still apply. For example, the DBS Savings Account has an incidental overdraft interest charge Prime + 5% p.a. payable on the overdrawn amount (min. S$20).

However, it’s important to monitor your linked accounts closely, as drawing from a credit facility will still incur interest, and some banks may charge a transfer fee for moving funds from one account to another.

Grace periods, overdraft buffers and waivers

A grace period or overdraft buffer gives you a short time window to top up your account before fees kick in. 

Unfortunately, most Singapore banks do not offer formal grace periods. However, there’s no harm in calling your bank to ask. Just like waivers or late payments, you may be granted a grace period on a case-by-case basis.

Choosing the best overdraft option in Singapore depends on how frequently you anticipate overdrawing your account and how comfortable you are with short-term borrowing.

If you occasionally run into shortfalls before payday, a line of credit might suit your needs. Banks like DBS and UOB offer credit lines – DBS Cashline and UOB CashPlus, respectively – which act as a buffer. These facilities give you immediate access to extra funds, and you only pay interest on the amount used. They’re ideal for those who want peace of mind knowing they have a backup if needed.

However, if overdrafts are rare or you're actively budgeting to avoid them, you might benefit most from opting out of overdraft coverage altogether. In this case, transactions that exceed your balance are simply declined – avoiding fees but requiring stricter spending discipline. It's a good option for those who want to avoid borrowing entirely and rely on their available cash.

Ultimately, the best option comes down to how hands-on you want to be. If you value flexibility and access, a credit line is the better choice. If you’d rather avoid all fees and interest, opting out may be the smartest move. In all cases, choose what fits your routine best – protection, flexibility, or total avoidance.

Here are a few smart ways to keep overdraft fees at bay in Singapore:

• Understand your bank’s overdraft policy. Each bank has its own rules – read up before assuming you're covered.

• Monitor account balance regularly. Set alerts or check your balance on mobile banking apps.

• Manage automatic payments and recurring bills. Time your bills around payday – or pause them if needed.

• Consider alternative payment methods. Use debit cards, PayNow, or e-wallets to avoid overdrawing.

• Opt out of overdraft coverage. If you want zero risk of being charged – this is the cleanest option.

• Use overdraft protection wisely. Only link accounts with available funds or manageable interest rates.

• Contact your bank for overdraft fee waiver. Made a one-time mistake? Your bank might waive the fee if you ask nicely.

• Overdraft. When you spend more money than you have in your bank account.

• Continuous negative balance fee. A penalty charged if your account stays overdrawn for several days.

• Nonsufficient funds (NSF) fee. A fee for a declined transaction due to lack of funds.

• Overdraft coverage. A service that lets transactions go through even if you don’t have enough money in your account. 

• Overdraft fee/Incidental Overdraft Charge. A charge for overdrawing your account – often paired with interest.

• Overdraft protection transfer. When your bank automatically moves funds from a linked account to prevent an overdraft.

• Overdraft protection transfer fee. A fee charged when the bank moves money from your linked account.

• Minimum overdraft interest. The lowest amount of interest you’ll be charged – even on a small overdraft. 

• Arranged overdraft. An overdraft you’ve applied for and been approved to use.

• Unarranged overdraft. An overdraft that occurs without a formal agreement – usually costlier.

• Personal loan. A fixed-term loan that provides a lump sum upfront, which you repay in monthly instalments with interest. Commonly used for large expenses like weddings, medical bills, or consolidating debt.

• Line of credit. A flexible borrowing facility that allows you to withdraw funds as needed – up to a pre-approved limit – and pay interest only on the amount used.