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In 2012, American banks earned $32 billion dollars in overdraft frees, up 1.3 percent from the previous year. Despite new rules to help prevent abusive overdraft charges, banks and credit unions have still found a way to end up on top.

According to the Huffington Post, financially struggling Americans have been hit the hardest because many banks have forced consumers into “costly overdraft-protection schemes.”

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“Consumers might be trying to hide from the banks, but the banks keep coming up with creative ways to pick their pockets,” said Ed Mierzwinski, a consumer program director. Here’s what he had to say about overdraft schemes:

According to Mierzwinski and others, the overdraft rules have led to a host of unexpected consequences, hurting consumers. Some banks now routinely change the chronological order of consumer transactions, putting larger purchases first, so that account holders sometimes find themselves paying multiple overdraft fees even if they exceeded their account balance only once. (The biggest banks charge a fee of $35 for each overdraft, on average.) Some institutions have raised the penalties on bounced checks to scare consumers into opting into overdraft protection.

So to make sure that your hard-earned paychecks aren’t adding to the banks’ billion dollar revenues, let’s look at 5 ways to take responsibility for your spending and avoid being charged those unwanted overdraft fees.

1. Balance your own checkbook. You should always strive to keep your account in a positive balance, and to do this you can’t always rely on the available balance amount that your bank provides. Online banking is a great tool, however the available balance does not always reflect your scheduled or recently-made purchases.

2. Create an artificial buffer. No one knows your spending habits like you do, so give yourself a cushion in your checking account. Most overdrafts fees are the result of small purchases, like fast food, coffee or gas. So just in case you go over your limit, give yourself a $50, $75 or $100 buffer. This will ensure your account balance always stays in the green.

3. Sign up for overdraft protection by linking a backup account. Although this service is not free at all banks, it’s definitely worth the extra money if your are prone to over drafting your account.  To cover any overages, considering linking your checking account to a savings, credit card or line of credit.

4. Go old school and use cash. Using cash more often is a great way to avoid potential overdraft fees because you can’t over spend with the dollar bills you have in your pocket. Some reports show that people tend to spend more with debit cards than they do with cash. So to avoid being statistic, make more bill payments and give yourself a daily or weekly cash budget.

5. Sign up for alerts. Services like provide phone, email and text alerts when your account is reaching low funds. This will help you make better choices for your daily spending and prepare for unexpected events, like a flat tire or kitchen appliance repair.


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