Lessons on avoiding overdraft fees


The American Bankers Association finds that an overwhelming majority of Americans are avoiding overdraft fees, according to a recent survey.

What's more, most are learning from their mistakes: 36 percent of those caught without enough in their checking or debit accounts got hit only once in the last year with an overdraft fee.

At the same time, however, 35 percent got stuck with four or more overdrafts. Eleven percent of those had six to 10, which at about $29 a pop could cost a consumer as much as $290.

Consumers can sidestep overdraft by following the ABA's tips:

- Have your paycheck directly deposited into your account. You will have immediate access to your paycheck.

- Always keep track of your balance and transactions, including automatic payments. You can track balances and transactions online, by phone or at the ATM, 24 hours a day. Some banks even offer mobile banking so you can check your balance on your cell phone. Remember, though, that those balances will not reflect transactions you authorized that have not been processed by your bank.

- Keep a "pad" or cushion of money in your checking account. Just to be safe.

- Link your checking account to a savings account or credit card. These are usually less expensive alternatives, but remember to pay them off.

- Ask your bank for an overdraft line of credit to cover you. Just be sure to pay it back as soon as you get the bill.

- See if your bank offers automatic notification when your balance drops below a certain level. Many banks will notify you by text message or e-mail.

- Change banks if your bank doesn't offer the services you would like, or charges too much for overdrafts.