Overdrafts occur when you spend more money than you have available in your account. This can happen through online bill payments, writing checks, using an ATM, or making purchases with a debit card.

While it’s important to track your balance to avoid overdrawing your account, mistakes can happen. Depending on your financial institution, you may have overdraft or “bounce” protection. This allows transactions to go through even when your balance is insufficient, but fees will apply. These fees function like a short-term loan that is repaid when you make your next deposit.

A study by the Center for Responsible Lending of 5,000 American households found that nearly half of all overdraft loans are triggered by ATM withdrawals or debit card transactions at stores, restaurants, gas stations, and other merchants. Paper checks account for about one-quarter of overdrafts, and online bill payments account for another quarter.

To avoid paying unnecessary fees, monitor your account balance closely and stay aware of how much you have available before making purchases.