Which statement about overdraft fees is true?

• A. Overdraft fees can be avoided by managing balance and using overdraft protection when appropriate.
• B. Overdraft fees are unavoidable in most cases
• C. Overdraft fees are charged monthly regardless
• D. Overdraft fees only apply to credit cards

Answer: (A)

Overdraft fees happen when you spend more than you have in your checking account and the bank covers the shortfall. The key idea is that these fees aren’t inevitable—you can prevent them by staying aware of your balance and using overdraft protection when it makes sense. For example, regularly checking your balance, setting low-balance alerts, and keeping a small cushion can help you avoid overdrawing. Overdraft protection options, like linking a savings account or a line of credit to your checking, can step in automatically or help you cover the shortfall without costly per-transaction fees. Because of these protections and careful management, overdraft fees aren’t unavoidable in most cases, they aren’t charged every month as a standard rule, and they mainly relate to checking/debit activity rather than credit cards, which have different fee structures.