How to Avoid Overdraft Fees

Overdraft fees are one of the most frustrating and expensive mistakes a bank account holder can make. One small slip like forgetting about an automatic subscription or miscalculating your balance can lead to a $30–$40 fee for spending more than you have in your account.

For young adults who are just starting to manage money, overdraft fees can feel like throwing money away. The good news? With a little planning, you can avoid them almost entirely.

What Is an Overdraft?

An overdraft happens when you spend more money than is available in your checking account. For example:

• You have $75 in your account.

• Netflix charges your $15 subscription.

• You swipe your debit card for $70 at the grocery store.

You’re now $10 short. Instead of declining your purchase, your bank may “cover” it, but then charge you a steep overdraft fee.

Why Overdraft Fees Add Up So Fast

• Multiple charges in a day: If several payments hit while your account is low, you can get charged for each one.

• High penalty fees: Most banks charge between $30–$40 per overdraft.

• Compounding stress: For young adults with tight budgets, these fees can spiral quickly.

Smart Ways to Avoid Overdraft Fees

1. Track Your Balance in Real Time

Don’t rely on “mental math.” Use your bank’s mobile app  to check your balance before making purchases.

2. Turn Off Overdraft Protection

It sounds helpful, but overdraft protection often just means your bank covers the charge then bills you a fee. Turning it off means your card will be declined instead of triggering a fee.

3. Link a Backup Account

Some banks let you connect your savings account or even a credit card to your checking account. If you overspend, the bank transfers money from the backup account instead of charging an overdraft fee.

4. Use Direct Deposit

Setting up direct deposit means your paycheck arrives faster and more consistently, reducing the chances of timing issues when bills hit.

5. Keep a “Buffer” in Your Account

Even $50–$100 left untouched in your checking account can protect you from accidental overdrafts. Think of it as a “safety cushion.”

The Bigger Picture

Avoiding overdraft fees isn’t just about saving $30 here and there. It’s about building good money habits, staying in control of your spending, and reducing unnecessary stress. Every dollar you don’t lose to fees is one more dollar you can put toward savings, debt payoff, or goals that matter to you.

Know your balance, set alerts, and create small buffers those simple moves will help you keep more money in your pocket instead of paying it to the bank.