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It’s perhaps not surprising that the older folks get, the better they are at handling money and avoiding penalty fees. But you might be surprised at how stark the difference is between younger and older generations when it comes to that super villain of financial penalties, the checking account overdraft.

Young adults aged 18-25 are four times more likely than folks 62 and over to suffer 10 overdraft fees or more every year, according to data from a Consumer Financial Protection Bureau report.

In fact, more than one in 10 members of the under-25 crowd pays 10 or more overdraft fees annually. And about four in 10 pay at least one overdraft fee each year.

At about $34 each, that’s a budget-killer for students and young adults trying to find their way into the workplace.

Overdrafts — the modern term for bouncing a check — can happen in numerous ways, including automatic bill-pay and debit card purchases that send an account into the red. Consumers who opt into their banks’ overdraft protection often find they pay $34 in fees for charges that send their accounts only a few dollars past a $0 balance. The CFPB says the average amount that is overdrawn from an account to cause the fee being charged is $24.

The cost of borrowing such small sums is astronomical.

“Put in lending terms, if a consumer borrowed $24 for three days and paid the median overdraft fee of $34, such a loan would carry a 17,000% annual percentage rate,” the CFPB says.

Banks collected about $32 billion in overdraft fees during 2013, according to Moebs Services.

On a positive note, consumers’ ability to avoid overdraft fees clearly improves with age. Only 27% of the 45-62 crowd pay even one overdraft fee each year, and only 15% of the 62-and-over crowd does so. And a tiny 2.8% of that oldest group pays 10 or more overdrafts.

“We find that the share of accounts in higher overdraft categories generally declines with account holder age,” the CFPB says in its report.

One potential reason that overdrafts could be common among the younger set: Colleges and the Department of Education use debit cards to distribute financial aid, and some of those cards have less-than-ideal terms — including numerous fees — according to a report issued last week by the CFPB.

How to Avoid Overdraft Fees

Paying the occasional overdraft fee, while an expensive mistake, isn’t the end of the world. The real trouble starts when such fees become a bad habit, an all-too-common problem – which clearly happens to that 10.7% of young people who end up paying at least 10 overdraft fees each year. One easy tip to avoid that: Reject your bank’s overdraft protection, so debit card purchases that exceed your balance are simply declined. It’s still possible to bounce a check, but much less likely to pay a series of overdraft fees for other kinds of electronic transactions.

“Consumers who opt-in for overdraft fee services are paying significantly more for their checking accounts than non-opted-in consumers,” the CFPB says. “On average, opted-in accounts pay almost $260 per year in overdraft and NSF fees compared to just over $35 for non-opted-in accounts.”

Prior to 2010, most banks automatically enrolled consumers in overdraft protection. That year, new Federal Reserve regulations required banks get an affirmative “opt-in” for the service. Many financial institutions aggressively market it as a convenience, and it’s possible you have agreed to it without realizing that. It’s best to check.

Better still is to opt for a different kind of overdraft protection that links your checking account to a savings account or credit card, and draws from one of your accounts to cover any potential shortfall. The fee is usually only a couple of dollars for the automated transfer. The distinction between these two overdraft-related services can be confusing, but here’s a simple guide – if you’re borrowing the bank’s money, it’s expensive. If you’re borrowing from yourself, it’s cheap.

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