Should You Get Overdraft Protection?

When opening a checking account, your bank will likely ask if you want overdraft protection — which covers your transactions even if you spend more than you have in your account.

But overdraft protection comes at a cost. The typical fee is $35 per overdraft, according to the Center for Responsible Lending. Consumers who frequently overdraw their accounts can easily rack up hundreds of dollars in fees annually.

You can, of course, decline overdraft protection. But if you write a check and don't have enough money in your account to cover it, the bad check won't go through, and the bank can charge you a nonsufficient fund fee — often the same as the overdraft fee. You might also be charged a returned-check fee.

You can avoid hefty overdraft and nonsufficient fund fees with a few simple good habits.

Stay on top of your account balance. Prevent overdrawing your account by tracking your balance and replenishing it when it's low.

Technology makes it easy to monitor accounts. For example, you can check your balance at any time using a mobile app from your bank. Or you can sign up for an alert with your bank, so you're notified when your balance falls to a certain level.

Use direct deposit. If your account balance is often dangerously low right before payday, have your paychecks directly deposited into your account. You'll have access to your pay much faster than if you deposit a paper check — possibly preventing you from overdrawing.

Link accounts. By linking a savings account to your checking account, your bank will transfer money from savings to cover a shortfall in checking. A transfer fee will be charged, but at $10 or so, the cost is much lower than an overdraft protection or nonsufficient fund fee.

Shop around. If you decide you want overdraft protection despite the fees, research the terms because overdraft rules and costs vary among institutions. Some newer online banking companies, for example, won't charge a fee if you overdraw your account by $50 or $100 when using their debit card.