What is an overdraft?

If you struggle to pay all your bills on time every month, you might occasionally find that you're being hit with an overdraft fee from your bank, but you might not know what it is.

Basically, it means you tried to take money out of your account that wasn't there, and ended up going into negative funds. This, in and of itself, can be a problem because it means you owe the bank money. But when you do that, you're also going to be hit with a potentially sizable penalty fee.

The problem for many is that these fees can add up to as much as $35 dollars or so, and it doesn't matter if they overdrew their account by $50 or a penny. The only way to avoid these fees, though, is to budget more carefully so that you don't end up taking more money out of your account than you had in it.