Three ways to avoid overdraft Fees

Bank at a credit union or small bank.

"Credit unions have the lowest fees and require the lowest balances," says Ed Mierzwinski, of consumer-advocacy group US PIRG. And small community banks make it easier to decline overdraft protection. If your bank doesn't let you opt out, find one that does.

Link to another account.

Link your checking account to a savings account or credit line. Megabanks such as Bank of America, Citibank and JPMorgan Chase have upped their charge for each transfer to $10. But nearly half of the banks in the FDIC study charged no fees for transfers from linked accounts, and the median fee was a modest $5. (Some banks charge an annual fee of, say, $20 instead of a fee for each transfer.) You'll pay an average of 18% interest with a line of credit that you can tap when your checking account runs low.

Set up two accounts.

Link one checking account to a line of credit or savings account and use it to pay your mortgage and other important bills, recommends Michael Moebs, of Moebs Services. Use the second account for small items that you pay for with a debit card, but do not link it to a savings account or line of credit. That way, Moebs says, you can be sure you won't pay a $33 overdraft fee on a $4 latte.

By Joan Goldwasser,