The U.S. government is taking strong measures to limit banks’ ability to charge overdraft fees to checking account holders. The Federal Reserve is prohibiting banks from charging overdraft fees on ATM or debit card transactions unless a customer has agreed (in advance) to pay extra charges for exceeding account balances. In the legislature, both the House of Representatives and the Senate have proposed bills that would restrict banks’ ability to charge overdraft fees beyond one overdraft fee a month or six in a year.

According to the new rules, financial companies will have to explain overdraft programs and fees along with the choices available to their customers.

As we’ve written about earlier, many banks recognized the rising consumer anger over escalating overdraft fees and looked to stave off government intervention by introducing self-imposed limits on overdraft fees. Apparently that was too little, too late. Banks will collect more than $40 billion in these fees this year. The new regs go into effect next year.

Now that the government has grown a pair and is throwing its weight around on behalf of consumers, banks will need to be even more vigilant in policing themselves and not raising the ire of the public with nickel and dime fees that turn into arm-and-a-leg charges.

There are steps you can take to avoid overdraft fees resulting from your debit card transactions. A Consumer Reports blog has a good article on protecting yourself from overdrafts when using debit cards. This is especially important with the upcoming holiday season approaching. Americans are using credit cards a lot less, and debit cards a lot more. So while they are saving money on interest payments and fees, they are opening themselves up to a new kind of problem with overdrafts.

Of course the simplest way to avoid overdraft charges is to keep a meticulous account of checks written, bills paid, debit card charges made and fees assessed to your bank account. Whether you use an old-school paper check register, a spreadsheet or iPhone app, it’s important that you know how much you can spend before you swipe the stripe. Barring that, find out if your bank offers overdraft protection at a reasonable cost.

But $30 dollars or more is a high price to pay for a simple mistake (especially given the state of our public school math instruction) so it’s good to see the government enforcing a more just relationship between banks and their customers.