Over the next couple of months the banks will almost certainly report that they were profitable during the final three months of 2009 and are on the road to recovery.

Don’t believe it.

The turnaround banks are touting is only possible because they’re still refusing to acknowledge all of the bad loans on their books.

So far, banks have written off about $600 billion in losses from the housing bubble and recession.

Estimates that we’ve seen from banking industry analysts project their true losses to be anywhere from a merely disastrous $1.6 trillion to a truly staggering $3.8 trillion.

So in the best case scenario, banks have acknowledged only about one-third of the losses they’ve suffered. In the worst case scenario they’ve dealt with a paltry one-sixth of those losses.

The losses banks are refusing to write down dwarf the profits they’ve supposedly made since the financial crisis struck in late 2008.

Allowing overvalued loans to remain on the books was part of the Federal Reserve and Treasury Department’s effort to save the nation’s banking industry from collapse.

But that policy is now working against the government’s push to get banks lending again.

The Fed is providing banks with virtually all of the free money they could possibly want. (It does that by making short-term loans to commercial banks for 0% to 0.25%).

That’s why banks don’t need our deposits and continue slashing interest rates on all types of savings to record low after record low.

Yet the banks will never respond to the Fed’s incentives and make new loans when they still have so many bad loans on their books.

So the Fed needs to get tough and make the banks acknowledge all of their overvalued assets now, even if it means they’ll have a couple of unprofitable quarters this year.

It’s a critical step towards getting the banks to lend again, getting the Fed to stop driving down interest rates, and getting decent returns for millions of savers.

That’s the real road to recovery.

Having money automatically added to your savings account each time you buy something is one way to put something aside for the future.

Now U.S. Bank has come up with one of the best spend-and-save programs we’ve seen.

It’s more generous and flexible than other programs, allowing you to build a bigger balance and rewarding your efforts with up $100 in bonuses.

The “Savings Today And Rewards Tomorrow” or S.T.A.R.T. program is available to anyone with a U.S. Bank checking and money market account.

The program transfers whatever amount you choose — anywhere from 25 cents to $5 — from your checking account to your MMA each time you buy something with a U.S. Bank debit or credit card.

If you have a U.S. Bank FlexPerks Cash Rewards Visa Credit Card or FlexPerks Cash Rewards Visa Check Card, you can have your monthly FlexPerks Cash Rewards deposited in your money market account.

You can also arrange for regular transfers each week or month, corresponding to when you get paid.

There’s no limit on how many transfers you can make or how much you can move each month.

After you’ve accumulated $1,000, U.S. Bank will give you a bonus — a $50 U.S. Bank Rewards Visa Card.

Maintain a balance of $1,000 or more for a year, and you’ll earn another $50 Rewards Card.

Once you’ve signed up for S.T.A.R.T., your monthly bank statement will list how much you’ve saved using the program.

The average return on money market accounts is a pathetic 0.23%. U.S. Bank is paying anywhere from 0.15% to 1.0% on its MMAs, depending on where you live.

But that doesn’t negate the point of these programs, which is turn you into a regular saver even if the process is a little gimmicky.

S.T.A.R.T. allows you to save much more than a typical “Keep the Change” program, which rounds up each purchase to the nearest dollar and transfers the extra coin from your checking to savings account.

It also allows you to set aside more than similar spend-and-save programs such as Wachovia’s “Way2Save,” which limits transfers to $1 per transaction.

We certainly know that store credit cards routinely charge higher interest rates and more costly fees than other credit cards.

But we were still surprised by a “change in terms” letter from the bank that provides cards for many stores, including Victoria’s Secret, Avenue, Limited, New York & Co., Abercrombie & Fitch, JCrew, Express, Pottery Barn and Restoration Hardware.

First of all, World Financial Network National Bank will impose a $1 fee for every paper statement customers receive.

While some banks have begun charging checking account customers who still want to receive statements in the mail, this is the first time we’ve heard of a bank imposing such a fee on credit card customers.

These cards have also been charging adjustable interest rates that ranged from 11.99% to 24.99% APR.

When the changes take effect everyone will pay the maximum 24.99% — 21.74% plus prime (which is currently 3.25%).

That’s much higher than the 13% to 18% APR you’ll pay on the typical adjustable-rate Visa and MasterCard.

Finally, the new agreement says cardholders must still waive their right to take billing disputes to court and settle all disagreements in arbitration.

This comes at a time most major credit cards are dropping mandatory arbitration because it’s so blatantly tilted against the consumer.

Of course you can opt out of these changes by sending World Financial a letter refusing to accept the changes, closing the account and paying off your balance under the old terms.

That certainly seems like the smart thing to do for credit cards with terms as bad as these.

Emotions play a big role in how we spend our money.

Way too big, according to a new book by psychiatrist David Kreuger.

We use money to “alter our moods, increase our self-esteem, and control others,” Kreuger says. “We use money to try to soothe emotional pains and to buy the respect of others and ourselves.”

But, as your mom (not to mention the Beatles) always told you, money can’t buy you love.

Recognizing and overcoming that destructive behavior is what The Secret Language of Money: How to Make Smarter Financial Decisions and Live a Richer Life (McGraw-Hill, $25.95) is all about.

This makes Secret Language the right book for right now: An easy-to-understand financial guide for all of those Americans trying to restore some balance in their lives after pigging-out out on easy credit.

In Krueger’s view, millions of consumers unconsciously try to spend their way to happiness.

When we allow emotions like that to rule our financial lives, we wind up spending more than we make, falling for every scam and speculative bubble that comes along, and plunging into debt.

(For a great example of how this can happen, see our post “Real Trouble For Bravo’s ‘Real Housewives.’”)

He takes money emotions down to the biological level, not necessarily to show us that our brains are to blame (he doesn’t let you blame anyone for your actions except yourself), but how to overcome gut reactions to make sound financial decisions.

The book isn’t perfect, but you can’t argue with its core message.

We know that flies in the face of all conventional economic wisdom.

But for the past year the Federal Reserve has been providing commercial banks with an almost limitless supply of free money in the hope that they’ll make lots of new loans and help boost the economy out of the recession.

(Its rate-setting committee is doing that by charging banks 0% to 0.25% for overnight loans.)

Yet the banks are extending precious little credit to consumers. To small businesses. To anyone.

Could it be that Fed Chairman Ben Bernanke has pushed conventional economic wisdom too far by driving interest rates too low?

The Fed is making money so cheap that banks can turn a profit by simply parking it in Treasuries without making any of the effort, or taking any of the risk, involved in making loans.

If Bernanke made banks pay more for their deposits it might negate that strategy and force them to seek better returns by making more loans.

We know, we know. There are lots of reasons banks are not lending money. It’s risky business in this economy and there are still billions if not trillions of dollars worth of bad loans banks haven’t even begun to deal with.

But before President Obama hauls bank presidents back to the White House for another scolding, maybe he and Bernanke should at least try a modest rate increase.

What do they have to lose? And the millions of savers who have suffered so grievously from the Fed’s cheap-money policy could use the break.

Making your home bigger, or nicer, always makes it more valuable. But some projects payoff better than others.

The average return on improvements has fallen for four straight years, slumping to 63.8% in 2009, which means every dollar spent now boosts a home’s value by an average of 63.8 cents

To determine which projects provide the best return we went straight to the mother lode of data — the brand new cost-versus-value home improvement survey by Remodeling Magazine and the National Association of Realtors.

We used that data to create a list of the 10 best home improvements, based strictly on the percentage of the cost recouped at resale.

We pulled out variations on the same themes, such as one kitchen remodeling project instead of minor, midrange and upscale kitchen renovations, which the annual survey breaks out in great detail. In those cases, we gave you the version that produced the highest rate of return.

Our top 10 home improvement projects, with the national average for cost, resale value and the percentage of the cost that was recouped, are:

Improvement 1. Replacing the entry door with a midrange steel door costs $1,172 and adds $1,470 to your home’s value, or 128.9% of the cost.

Improvement 2. Upscale siding replacement costs $13,287 and adds $11,112 to your home’s value, 83.6% of the cost.

Improvement 3. Renovating an attic into a bedroom costs $49,346 and adds $40,992 in value, 83.1% of the cost.

Improvement 4. Adding a wooden deck costs $10,634 and adds $8,573 in value, 80.6% of the cost.

Improvement 5. Minor kitchen remodeling costs $21,411 and adds $16,773 in value, 78.3% of the cost.

Improvement 6. Replacing windows with midrange wood windows costs $11,700 and adds $9,044 in value, 77.3% of the cost.

Improvement 7. Finishing a basement costs $62,067 and adds $46,825 in value, 75.4% of the cost.

Improvement 8. Midrange bathroom remodeling costs $16,142 and adds $11,454 in value, 71% of the cost.

Improvement 9. Adding a second story costs $156,309 and adds $107,286 in value, 68.6% of the cost.

Improvement 10. Replacing the roof costs $19,731 and adds $13,133 in value, 66.6% of the cost.

A minor facelift would include things such as replacing faucets, adding new flooring, new wallpaper or tile, new towel bar and toilet paper holder, maybe new doors for the shower.

Midrange remodeling adds new vanities and countertops, mirrors, medicine chest and maybe pulling the toilet and doing a new tub surround.

A midrange addition involves building a new bathroom with moderately priced fixtures, such as $165 for a solid-surface countertop with built-in sink as opposed to $500 for a custom-ordered sink that you would expect in a luxury addition.

Discover Card has promoted its 5% Cashback Bonus on “rotating items” for quite some time.

But never knowing what might be eligible for that hefty rebate a few months down the road aggravated more than a few Discover More cardholders.

Now Discover is publishing a calendar of future offers on the Web page where you must sign-up in advance to qualify for each bonus.

Here’s where and when you can earn the 5% rebate during the first nine months of 2010:

January through March: Airlines, hotels, rental cars and cruises.

March: Grocery and drug stores.

April through June: Home improvement, department and clothing stores.

July through September: Gas stations, hotels, movie theaters and movie rentals.

Unfortunately, a significant restriction remains: Cardholders can only earn the 5% bonus on a limited amount of qualifying purchases.

For the current offer of grocery stores, restaurants and movie theaters, the spending limit is $400. For the travel rebate it will be $800.

Cardholders will also continue to earn a 0.25% rebate on all non-bonus purchases until they’ve charged $3,000 each year. Then the non-bonus rebate jumps up to 1%.

Rebates are redeemable in $20 increments for gift cards you can use to shop Discover’s online stores, for Discover Gift Cards or for charitable donations.

Once you’ve accumulated $50 worth of rebates you can have the money direct deposited into your bank account or credited to your Discover Card bill.

We usually write about where to find the best CD rates.

But today we’re going to focus on where to find the worst deals.

We’re talking truly wretched rates such as 0.15% APY on a 6-month CD, or 0.25% APY for a 12-month CD.

Those are the kinds of deals you’ll find these days at the nation’s biggest banks.

JP Morgan Chase is the worst, but Citibank, Wells Fargo, PNC and all the others are nearly as bad.

These banks don’t have to compete for our savings because:

• They can borrow as much money as they need from the Federal Reserve for practically nothing. No, really, the rate for overnight loans is 0% to 0.25%.
• They don’t really need much money because they’re whacking billions from their loan portfolios every month.

That’s why you see one small bank after another take a turn at the top of our CD rankings.

These are banks that are still trying to grow by taking in new deposits and funneling that money to new loans and investments.

But so many savers rush to those small banks that more money than they can wisely use floods into new accounts.

Within weeks, sometimes days, they cut their rates to slow the flow of money into the bank and fall out of the rankings.

The bottom line for savers: We won’t see decent certificate of deposit rates again until the big banks, with their ability to put large sums of money to work, get back in the game.

Yet look at the shameful difference between what the big banks are paying and the best, nationally available deals from the smaller banks that lead our rankings:

Harris Bank is paying 0.15% APY on a 6-month CD. TotalBank is paying 1.65% APY.

JP Morgan Chase is paying 0.25% APY on 12-month CDs. Five small banks, including H&R Block Bank are paying 2.00% APY.

PNC Bank is paying 1.05% APY on a 24-month CD. Frontier Bank is paying 2.40% APY, 2.45% APY or 2.50% APY, depending on the minimum deposit.

Bank of America is paying 1.86% on 36-month CDs. Goldwater Bank is paying 3.03%.

Rates on home equity lines of credit haven’t changed much since mid-October — and that’s a good thing.

Homeowners with pretty good credit and a chuck of equity in their homes should be able to get a HELOC for 5% or less in most parts of the country.

While that isn’t as cheap as they were last spring, when you could get one for 4% or less, they’re still the least expensive consumer loans available.

Here are some of our favorite deals from big and small lenders:

Third Federal Savings & Loan is charging 3.25% for credit lines up to $49,999 and 2.99% for lines of $50,000 to $150,000. These loans are available in 18 states from Oregon to Florida and there’s no annual fee.

BB&T Company, headquartered in Winston-Salem, N.C. with 1,500 financial centers in 11 southeastern states and Washington, D.C., charges 4.25% with a $50 yearly fee and a $5,000 minimum.

US Bank, which serves 24 states nationwide, has rates as low as 3.99% and as high as 9.25% in parts of California, Nevada and Arizona — states that have suffered the steepest declines in home prices. A $90 annual fee is assessed on some loans.

Bank Financial, which serves Illinois, Indiana and Wisconsin, has HELOCs for as little as 4.0% and a modest $20 yearly fee.

Salem Five offers a 3.25% introductory rate that increases to 4.0% after six months in five New England states — Massachusetts, Maine, Rhode Island, Vermont and New Hampshire. The $50 annual fee is waived for some checking account holders.

To qualify for one of these HELOCs you need:

• A credit score of at least 660, with the exceptions of Nationwide Bank and Third Federal Savings, which require a minimum score of 720.
• To retain 20% equity in your home after the line of credit is added on to the balance of your primary mortgage.

Are all the “Real Housewives” on Bravo’s reality shows as rich as they seem, or are some living way beyond their means?

We regularly see these outspoken women from Orange County, Calif., New York, New Jersey and Atlanta shoulder the burden of wealth as they frequent only the best shops, restaurants and spas.

But over the past year, at least a few of these icons for conspicuous consumption have run into financial problems.

One was thrown out of her million-dollar mansion in a foreclosure. Others have been through short sales and mortgage modifications, failing businesses and bad investments. A couple have even been evicted for falling behind in their rent (yeah, some of the homes you see on TV are leased).

Here’s Bankaholic’s unofficial tally of the Real Housewives who have gotten into Real Trouble over the past year:

Sheree Whitfield of Atlanta: Whitfield was banking on a big divorce settlement, which she didn’t get. When ex-hubby and former NFL offensive tackle Bob Whitfield stopped paying the mortgage on her house (which was in his name only) the bank foreclosed and kicked her out. The Atlanta Journal Constitution says the home sold for $1.1 million, less than half of what the Whitfields paid for it in 2000.

Tamara Barney of Orange County: When Barney and her husband met with a real estate agent they bragged about the $400,000 in improvements they made to their home. Yet they owed more than the house was worth and the Orange County Register reported that they recently had to part with it in a short sale.

Jeana Keough of Orange County: A real estate agent and owner of four homes, Keough has been short on cash since business dried up. Now Keough is selling her cars and watches and asking friends for loans. But she was luckier than Whitfield and Barney. After defaulting on the mortgage for her primary home, Keough told the Orange County Register that she got a loan modification. She also opted out of the show this season.

NeNe Leakes of Atlanta: The Atlanta Journal Constitution says Leakes was kicked out of her home in September after falling $6,000 behind in the rent. Leakes says that’s not true. She moved out on her own free will. Her husband, a real estate investor who might not be her legal husband according to some gossip rags, allegedly owes over $100,000 in back taxes, too.

Lynne Curtin of Orange County: This housewife and her family were booted out of their home over $12,000 in back rent and damages. Curtin’s husband blamed their financial problems on a few bad investments in — you guessed it — real estate. Remarkably, none of that stopped Curtin from having cosmetic surgery, paying for it from her “face lift” fund.

Teresa Guidice of New Jersey: Initial reports that Guidice and her family were losing their lavish mansion were wrong. But nj.com says lenders are foreclosing on a half-acre of undeveloped land Guidice bought about five miles away, claiming she still owes $127,500 on the property she bought for $170,000 in 2005.

Watch out for credit cards asking you to “opt in” to over-the-limit fees.

Yeah, it’s seems like a no-brainer to say “no” to that one.

When the Credit Card Accountability Responsibility and Disclosure Act takes full effect on Feb. 22, it will protect consumers from some of the industry’s worst abuses.

Penalties for exceeding your credit limit is one of them.

But we’ve heard of at least one bank that’s using a misleading sales pitch to see if it can get customers to accept this punitive fee.

Credit cards can simply decline any purchase that pushes customers over their credit limit.

But they’ve been more than willing to let cardholders overspend by a few hundreds dollars so that they could impose an over-the-limit fee every month until their balance was back in line.

The Credit CARD Act forbids credit cards from automatically allowing you to go over the credit limit and then hitting you with a big fee.

It requires issuers to contact each cardholder and ask them to “opt in” to the privilege of exceeding their credit limit — and paying a fee for doing so.

That involves so much work, and is such an obviously bad deal for cardholders, that American Express and Discover have already decided it isn’t worth the hassle.

They’re just dropping over-the-limit fees.

But it appears some banks are hitting the phones and asking their customers to “opt in” to over-the-limit fees.

Capital One, for example, is trying to get its sell opting-in as a money saver. If you say “yes,” it will drop the over-the-limit fee from $39 to $29.

In the sales pitch described to us by one unhappy cardholder, Capital One doesn’t promise to accept any over-the-limit charges you might make.

We asked Capital One if there would be any advantages for customers who opted-in to the fee. Would they be able to make more over-the-limit charges than customers who opt-out, for example?

The bank never called us back with an answer. We’ll take that to be a “no” until it does.

If you already opted-in, call Capital One back and opt out. The customer service reps will give you grief but you have the right to change your mind.

Hire a contractor — not a home inspector — to examine any house you’re thinking about buying.

You just can’t count on them to tell you what’s wrong with a home because of the three dirty little secrets about the home inspection business:

Dirty Little Secret 1. The great majority of home inspectors depend on real estate agents to recommend them to their clients. And any inspector who wrecks a deal by pointing out problems with a home won’t get recommended again.

Dirty Little Secret 2. Even when confronted with a problem so obvious that it can’t be ignored, home inspectors routinely decline to estimate how much it will cost to fix.

Dirty Little Secret 3. The standard contract says you can’t hold the home inspector responsible for anything they miss or get wrong. In other words, they don’t stand behind anything they tell you.

So just how valuable is the typical home inspector’s report? Not very.

For about the same amount of money you can hire a licensed general contractor to provide a far more realistic assessment of a home’s condition and how much you can expect to spend on repairs or improvements you’d like to make.

Line one up while you’re looking and have him (or her) ready to step in before you finalize any deal.

If the contractor isn’t sure about something, he can always call in a plumber or electrician he works with to give their expert opinion. (Something else you’ll never see a home inspector do.)

Getting this kind of advice is absolutely essential if you’re buying a foreclosure or short sale that may have been vandalized or neglected, and the repairs might run into the tens of thousands of dollars.

Click here for our latest look at the best mortgage rates.

Hybrids almost always cost more than comparable, conventionally powered models.

But the Toyota Camry Hybrid will save enough in gas to recoup that extra cost in well under two years, which makes it an excellent deal.

Indeed, we can’t understand why anyone would buy a Camry without the gas-saving, environment-friendly hybrid powertrain.

Unfortunately, we can’t say the same about most other hybrids, some of which need more than a decade of savings to recoup their higher initial price.

We got our information from the car-shopping website Edmunds.com, which recently studied the most popular 2009 and 2010 hybrids to see which ones made financial sense.

It compared the sticker prices of hybrid and non-hybrid models, and assumed gas would cost an average of $2.53 a gallon over 15,000 miles of driving a year.

The 2010 Camry Hybrid was the clear winner, needing just 1.4 years to recover the additional $477 it costs over a comparable gas-engine-only Camry.

The top-selling hybrid, Toyota’s 2010 Prius, pays back its $1,489 premium over a Camry (there’s no conventionally powered Prius model) in a respectable 2.1 years.

Although Toyota likes to compare the Prius to the Camry, we think it’s much more similar in size and performance to a compact Corolla than a mid-size Camry.

And when Edmunds compared the Prius to the Corolla, it needed a whopping 11.3 years to recoup its extra cost.

Unfortunately, it’s also typical of pretty much every other hybrid on the market.

The well-reviewed Ford Fusion Hybrid requires 8.1 years to recoup its extra cost over the standard Fusion.

The Lexus’ RX 450h, which TV ads tout as a technological marvel, takes 10.1 years to recover the hefty $5,844 premium over a standard RX 350.

Nissan Altima Hybrid requires 11.4 years and the Honda Civic Hybrid 13.3 years.

You’d have to drive Chevrolet’s 2009 Silverado Hybrid pickup 16.4 years to before the savings on gas would offset its additional, initial expense.

One thing we noticed about the Edmunds report: The new Honda Insight is only available as a hybrid and isn’t compared to any gas-powered car such as the Civic.

As a result, we can’t tell you how the least-expensive hybrid on the market stacks up.

If you have good credit and a down payment (or some equity if you’re refinancing) there’s no reason to pay 5% or more for your mortgage.

The best deals we could find on 30-year, fixed-rate loans in 10 major cities now range from 4.875% to 4.625%.

This the first month that every single city we’ve looked at had a rate below 5%, which is a substantial improvement over the 5.125% to 4.875% range we found in our October survey.

Those results reflect the fact that the average rate on 30-year, fixed-rate mortgages fell to a record low 5.06% last week.

A year ago those loans cost an average of 6.33%, and as recently as June it was still above 6%.

We look for 30-year, fixed-rate loans with no points and fees of less than $2,000. We think that is the best mortgage for the majority of refinancings and purchases.

To find the best rates in each market we search the databases at Bankrate.com and Interest.com.

The best deals we found were:

Atlanta: 4.75% from AMAC (American Mortgage Advisors Corp.)

Charlotte: 4.75% from PrimeLending Services.

Chicago: 4.75% from InterBank Lending.

Cleveland: 4.65% from Third Federal Savings& Loan.

Dallas: 4.875% from American Lending Group, Inc.

Los Angeles: 4.625% from RiteWay Mortgages.com.

New York: 4.75% from The Money Store.

Pittsburgh: 4.625% from Credence Mortgage.

Seattle: 4.75% from AmericanInterbanc Mortgage.

St. Louis: 4.875% from CapWest Mortgage Corp.

The fine print: These mortgage rates are for conforming loans (less than $417,000), and for borrowers with credit scores of at least 700. For scores from 680 to 699, you’ll usually pay higher fees, up to 1% of the loan value, or a higher rate.

Interest rates on the safest and most popular types of mortgages fell to record lows this week.

The average cost of a 30-year, fixed-rate mortgage was 5.06% in Bankrate’s latest weekly survey of major lenders.

That’s the lowest average since the survey began in 1985, whacking seven-hundredths-of-a-point off the previous record of 5.13% set in April.

A look through the databases at Bankrate.com and Interest.com found lenders in every market we checked offering 30-year, fixed-rate loans for 4.75%, with no points and fees of $2,000 or less.

That means your principal and interest payments will be just $522 a month for every $100,000 you borrow.

Pay a point or two, and you’ll be able to cut that to 4.375% and lower your payments to $500 a month for every $100,000 you borrow.

The average cost of a 15-year mortgage also fell to a record low 4.48% in the new survey.

Until the past couple of weeks, the average had never fallen below 4.72%, which it reached in April and September 2003.

Even jumbo loans — 30-year, fixed-rate mortgages for more than $417,000 to $729,500, depending on the market — are cheaper than they’ve been in years.

The average rate has fallen below 6% for the first time since September 2005, reaching 5.95% in the new survey.

Qualify for one of these loans and you’ll never have to refinance or worry about your mortgage again.

They’re safe, totally predictable loans that carry none of the risks associated with interest-only or adjustable-rate mortgages.

You’ll never have to fret about interest rates going up, principal payments kicking in or any other nasty surprises driving up your housing costs a few years down the road.

Check back Sunday for our latest look at the best mortgage rates.

Bank of the West is paying a $100 bonus for opening a new checking account.

Although the offer is available nationwide, we wouldn’t recommend it to anyone outside the 20 states where Bank of the West has more than 700 branches.

That’s because it doesn’t provide free use of ATMs at other banks — a great perk many of the best checking accounts now offer.

Without a Bank of the West machine nearby, ATM fees could gobble up your bonus in a matter of months.

To quailfy you must deposit at least $100 that is not currently in a Bank of the West account, establish a monthly direct deposit of at least $250, or pay 10 bills online, all within the first 60 days of opening the account.

You can choose from one of two types of personal checking accounts, and “Free Checking” seems like the best deal to us. No monthly fee. No minimum balance. Free online bill payment.

The other option is a “Choice Interest Checking Account,” which offers the same benefits, but in order to have the $10 per month service fee waived you have to:

• Establish a monthly direct deposit of at least $250.
• Maintain a $2,500 average monthly balance.
• Maintain a $5,000 average monthly balance in all Bank of the West accounts, including personal savings, CDs and IRAs.
• Make five or more online bill payments per statement cycle.

That seems like a lot of effort to get the miserly interest rates this checking account pays — 0.10% APY on balances below $10,000, 0.25% APY, for balances from $10,000 to $50,000, and 0.50% APY for balances above $50,000.

If you want to earn serious interest on your checking account balance, look into the rewards checking programs from Bank of the Sierra or Royal Banks of Missouri.

Bank of the West’s bonus offer ends Dec. 11.

Congress has extended the popular tax credit for first-time homebuyers and created a new tax break for homeowners looking to trade up.

When President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009 into law last week there was anaudible sigh of relief from the real estate industry.

The first-time buyers’ tax credit that was set to expire Nov. 30 has been credited with causing the modest bump in home sales we’ve seen the past few months.

Under the new law anyone who hasn’t owned a home in the past three years can claim a credit worth 10% of a home’s purchase price, up to $8,000.

Buyers can qualify by signing a sales contract between Nov. 7, 2009 and April 30, 2010, and closing on the purchase no later than July 1, 2010.

The act allows buyers with higher incomes to take advantage of that credit, too.

Under the original law, individual buyers could earn no more than $75,000, or $150,000 for couples filing jointly, to qualify for the full $8,000 credit.

Now, buyers making up to $125,000, or $250,000 for couples, can do so.

The new act also includes a tax credit of up to $6,500 for individuals and families who have lived in their homes for at least five years and want to move.

The deadlines are the same as for the first-time buyers’ tax credit — contract by April 30, closing by July 1.

Both credits require the home to be a principal residence and to cost no more than $800,000.

These tax breaks are particularly valuable because they’re credits, not deductions.

Deductions reduce your taxable income and lower the amount you owe in taxes by about 25 cents to 33 cents per dollar.

Tax credits are subtracted from the amount you owe the government. That means every dollar worth of tax credits lowers your tax bill by a full dollar.

If the credit is more than the tax you owe, you’ll be paid the difference.

Although buyers were able to file an amended 2008 tax return to claim the first-time homebuyers’ credit before the deadline was extended, a spokesman for the Internal Revenue Service told us that may change once details of the new bill’s implementation are worked out.

The IRS is also currently determining whether or not homeowners will be able to file an amended return to claim the new credit for existing homeowners.

With CD and savings account rates plunging to record lows every week, it may be the time to consider a more lucrative alternative — social or peer-to-peer lending.

This is where you loan money directly to worthy borrowers through a Web site, rather than putting your money in a bank and allowing its loan officers to pick the investments.

It’s possible to earn a better return than you’d ever get from a bank.

Lending Club, for example, says the net annualized return for its investors has been over 9.5% since 2007 — and yes, that includes the losses on loans that don’t get repaid.

For the rest of November, Lending Club is also offering a $50 bonus to Bankaholic readers who sign-up to be new lenders. (Use the link above and the money will be placed in your account as soon as you register.)

Then you can start reviewing applications and choose which loans to fund.

You won’t want to risk your hard-earned dollars on just one person. You can invest as little as $25 per loan and spread your money around to scores or even hundreds of loans.

The terms of each loan, including the interest rate, are established by Lending Club based on the creditworthiness of each borrower.

But its rigorous credit policy requires borrowers to have a minimum FICO score of 660 and maximum debt-to-income ratio of 25%, which has led to a low 3% annualized default rate.

Now, let’s be clear. This is not for everyone.

These loans are not insured by the FDIC or anyone else, and you shouldn’t commit more money than you can afford to lose.

Lending Club is pretty up-front about the risk and sets minimum financial standards for all lenders, requiring them to have:

• An annual gross income of at least $70,000 and a net worth of at least $70,000 (exclusive of home, home furnishings and automobiles). California residents must have $100,000 in gross income and net worth.

• Or, a net worth of at least $250,000.

Lending Club also limits investors from lending more than 10% of their net worth through the site.

If you know someone who needs to borrow money, Lending Club says its rates are up to 30% lower than similar loans at traditional financial institutions.

You can land a $50 bonus and top rate with Ridgestone Bank’s checking and savings account combo.

Its Momentum Savings account pays 2.50% APY on balances between $2,500 and $50,000.

That beats the best nationally available savings account rate, 2.25% APY from SFGI Direct, and matches the best deals on 24-month CDs.

To qualify for that rate you also have to open a Momentum Checking account and:

• Make eight transactions per month, which includes any checks you might write and debit card transactions.
• Automatically have at least $100 a month transferred from your checking to your savings account.
• Receive your combined savings and checking statements via the bank’s Web site.

If you don’t make the eight transactions, the interest rate on your savings account falls to 0.25% APY for that month.

Anything over the $50,000 maximum in the savings account earns 1.0% APY.

If this is starting to sound very much like the typical rules on high-yield or rewards checking accounts, that’s because they are.

Think of the Momentum accounts as Ridgestone’s riff on that concept — and the similarities don’t end there.

There are no monthly fees for either account and you can use your debit card free of charge at any MoneyPass ATM. (Click here to see if there’s a MoneyPass ATM near your home or work.)

You can also earn a $50 bonus by adding one direct deposit to your checking account.

Although this offer is available nationwide, you can’t sign up online. You’ve got to call one of the bank’s two branches in suburban Chicago (847-805-9520) or suburban Milwaukee (262-789-1011) to have an application e-mailed to you.

Click here to compare Ridgestone’s deal with the best savings and money market rates from dozens of other banks in our extensive database.

The Discover Motiva credit card has an intriguing bonus for anyone who carries a balance.

Pay at least the minimum due on time for six months and Discover will return your last interest payment.

Once you accumulate $20, you can receive a gift card to use at one of Discover’s 100 brand-name retail partners, or you can donate it to charity.

When you reach $50, you can also have the bonus credited to your credit card account or electronically deposited in a checking or savings account.

There are no limits on how much you can earn, so you can collect a bonus every six months until you get that balance paid off.

That bonus is on top of the 1% cash rebate you earn on most purchases — which will be worth a lot more once you’re out of debt and the rebate is not being gobbled up by interest charges.

There’s no annual fee and the introductory rate on purchases is 3.99% APR until May 2010. After that a variable rate from 11.99% APR to 18.99% APR kicks in, based on your credit history.

Motiva probably makes the most sense if you have a balance to transfer from another card.

The transfer fee is 3% of the balance — as good as you’ll find right now.

The introductory 3.99% interest rate is also available on balance transfers for 6 to 12 months depending on your credit.

That’s a little more than the 0% introductory rate some cards are offering on balance transfers. But none of them come with the cash bonus for making your payments.

Click here to compare Discover’s offer with those from the best balance transfer cards in our database.

If you’re purchasing a home, don’t go with just any real estate agent: Get a full-time buyer’s agent.

One of the advantages of working with a buyer’s agent is that you’re less likely to have conflicts of interest.

Unlike agents who represent buyers and sellers, buyer’s agents won’t steer you toward a home that one of their clients has listed or that’s being represented by an agent they’re working with on another deal.

When brokers are trying to buy and sell homes, it’s hard to know what all of the connections might be and feel confident that your best interests are being represented.

You should never have to wonder: “Is my agent pushing me to buy this home because he wants to curry favor with the selling agent? Are they working on another deal together where their roles are reversed?”

Start by looking for what’s called an exclusive buyer’s agent, which means he or she works for a real estate office that only represents buyers.

You’ll never have to wonder if you’re being shown homes that other agents in the office are selling so that the brokerage will earn all of the commission from the deal.

Be sure and ask if they’re a Certified Exclusive Buyer Agent (CEBA) by the National Association of Exclusive Buyer Agents.

Although that doesn’t guarantee you’ve found a great agent, it means they’ve received additional training on buyer-based negotiations and have closed a minimum of 12 transactions as an exclusive buyer’s agent.

If you can’t find an exclusive buyer’s agent in your area, go for a buyer’s agent at a traditional real estate office.

In this instance, ask if they’ve been certified as an Accredited Buyer Representative (ABR) by the National Association of Realtors.

An ABR also has special training on how to negotiate on a buyer’s behalf and must have completed at least five transactions as a buyer’s agent.

You should wonder about any agent who claims extensive experience as a buyer’s agent but hasn’t become an ABR or CEBA.

There’s been a lot of discussion since we pointed out that the Chase Freedom credit card has one of the best reward programs.

So let’s see what you think about the new Chase Sapphire credit card. We think it provides an intriguing combination of cash rebates and interest rates.

It charges no annual fee and an annual interest rate of 12.24% on purchases, which is lower than the teaser rate on many other credit cards.

As soon as cardholders make their first purchase they receive enough bonus points for a $100 rebate.

After that they earn points on all purchases, which can be redeemed for a 1% cash rebate. (Chase promotes a higher 2% to 10% rebate on purchases made through its Ultimate Rewards program, but that’s more marketing gimmick than real savings.)

This seems to strike a good balance for consumers who need a low interest rate because they occasionally carry a balance, but want to benefit with a modest cash rebate when they’re all paid up.

Click here to compare rates and rewards from dozens of credit cards in our database.

The best deals on home loans remained as good as they were in September.

The lowest rates for a 30-year, fixed-rate mortgage ranged from 5.125% to 4.875% in the 10 cities we surveyed this month, almost identical to the 5.125% to 4.625% range we found in September.

That definitely beats the best deals we were seeing over the summer with one caveat. Although interest rates are lower, the fees lenders are charging to arrange home loans are a little higher this fall.

We think a traditional 30-year, fixed-rate loan with no points and fees of $2,000 or less is the best mortgage for the majority of purchases and refinancings.

To find the best rates in each market we searched the extensive databases at Bankrate.com and Interest.com.

The least expensive rates in the cities we surveyed were:

Boston: 4.99% from Total Mortgage Services.

Chicago: 4.875% from InterBank Lending.

Cincinnati: 4.85% from ThirdFederal Savings & Loan.

Houston: 5.125% from D&H Lending.

Los Angeles: 4.875% from Nations Choice Mortgage.

New York: 4.875% from The Money Store.

Philadelphia: 5.00% from TD Bank, NA.

Phoenix: 5.0% from Mortgage Capital Associates.

Tampa: 5.065% from Bank Atlantic.

Washington, D.C.: 5.0% from BB&T.

The fine print: These mortgage rates are for conforming loans (less than $417,000), and for borrowers with credit scores of at least 700. For scores from 680 to 699, you’ll usually pay higher fees, up to 1% of the loan value, or a higher rate.

We think cash is a better reward than points or miles, and the Chase Freedom credit card has one of the best rebate programs right now.

You get at least 1% cash back on everything you buy.

You get 3% cash back on rotating categories for everyday purchases such as gas, home improvements and department store merchandise.

Then there’s the $50 bonus when you make your first purchase or balance transfer.

There’s no annual fee and no interest on purchases for six to 12 months, depending on your credit history. After that your interest rate will run from 13.24% to 23.24% APR.

The best home equity lines of credit are a little more costly this fall than they were in early summer.

Back in June, a number of lenders were offering HELOCs for less than 4%. Now only a couple have deals that good, and most borrowers will pay 4.25% or more.

You also need to remember that these are variable-rate loans, based on the prime rate — the interest rate banks charge the best commercial customers.

Most of the best home equity lines of credit are priced as prime plus 1% (although we did find one charging the prime plus 0%.)

Anyone with a HELOC should be prepared for the prime rate, which is a very low 3.25% right now, to go up sometime next year when the Federal Reserve starts boosting short-term interest rates.

But if you have enough equity in your home to get a HELOC, they remain the cheapest type of consumer loan. Here are some of the best deals around:

Third Federal Savings & Loan is charging 3.25% for homeowners in 18 states from Oregon to Florida for loans up to $49,999. For loans of $50,000 – $150,000, you pay only 2.99%. There’s no annual fee.

BB&T Company, headquartered in Winston-Salem, N.C. with 1,500 financial centers in 11 southeastern states and Washington, D.C., charges 4.25% with no fee and a $5,000 minimum.

Nationwide Bank, owned by Nationwide Insurance, is charging 4.50% with no annual fee.

Viewpoint Bank based in Plano, Texas, with 39 branches serving the north part of the state, offers 4.5% with no annual fee and a $4,000 minimum.

First Tennessee Bank, owned by First Horizon National Company, with branches in Arkansas, Georgia, Mississippi, Virginia and Tennessee, charges 4.25% with a $5,000 minimum and a $50 annual fee.

US Bank, which serves 24 states nationwide, has rates as low as 3.99% and as high as 9.25% in parts of California, Nevada and Arizona –- states that have suffered steep declines in home prices. You’re also tagged with a $90 yearly fee.

To qualify for one of these HELOCs you need:

• A credit score of at least 660, with the exception of Nationwide Bank and Third Federal Savings, which require a minimum score of 720.
• To retain 20% equity in your home after the line of credit is added on to the balance of your primary mortgage.

A small bank in West Virginia has taken over the top spot in our rankings of the best, nationally available savings accounts.

SFGI Direct is paying 2.25% APY with a minimum deposit of only $500.

SFGI Direct is the online division of Summit Community Bank, headquartered in Moorefield, W.Va., which has branches throughout the state and in northern Virginia.

Its rate is just a little less than Tennessee Commerce Bank was paying when it led our late-August ranking of top savings accounts.

While Tennessee Commerce is still paying 2.30% APY on its savings accounts, it stopped opening new accounts a few weeks ago so we can’t include it this month.

The return on SFGI savings accounts is also comparable to what you’d get with the best 12-month CDs, and its far more flexible, allowing investors to reduce or add to their balance anytime they’d like.

The downside, of course, is that yields on all savings accounts are variable. In better economic times, they could go up. In today’s market, they’re far more likely to go down.

The other top rates on savings accounts are:

2.15% APY with a minimum deposit of $1 from ShoreBank, which has branches in Chicago, Detroit and Cleveland.

2.00% APY with a minimum deposit of $100 from 1st Constitution Bank, which has 11 branches in central New Jersey.

That rate is only guaranteed for the first three months. After that it drops to 1.95% for accounts with balances of over $10,000 and 1.60% for accounts with balances below $10,000.

1.85% APY with a minimum deposit of $2,500 from Discover Bank, which is owned by the credit card company.

Compare these deals with the best savings and money market account rates from other banks in our extensive database.

Here’s a way to earn 3% on some of your money between now and the end of November.

Sears has created what it calls the Christmas Club.

Sign up by Oct. 31 at any Sears or Kmart store, or online at sears.com. No money is required to open an account.

Now figure out how much you can smartly spend at Sears or any of its affiliated stores — Kmart, the great indoors and Lands’ End — by the end of the year.

Hit the stores or Web sites and total up everything from holiday gifts to that new refrigerator or HDTV you’ve been planning to buy.

Deposit that amount in your Christmas Club account by Nov. 14 and Sears will add a 3% bonus to your balance by Nov. 25.

Since the store caps the bonus at $100, that means you can earn 3% on deposits of up to $3,333.

We know this is just a clever marketing gimmick from Sears. But let’s face it. You can’t earn 3% a year with most CDs and money market accounts right now.

If you only tie your money up in the Christmas Club account for a month, that works out to a very lucrative annualized return of 36%.

Your balance is put on a gift card that has no fees and never expires, so you can take as long as you like to spend it all. But the longer you take, the lower your return.

That’s why we think you should only deposit as much as you plan to spend before Jan. 1.

Add a new bank to our list of the top-paying, high-yield checking accounts.

It’s Royal Banks of Missouri, a 40-year-old institution with six branches in the St. Louis area.

It’s Majestic Checking Account is offering 4.30% APY on balances up to $25,000.

That’s the second-best rate we know of on a nationally-available checking account, topped only by Bank of the Sierra, which pays 4.51% APY.

If you’re not familiar with how these accounts work, “The ABCs of High-Yield Checking Accounts,” will fill in the details.

If you know all about high-yield or reward checking accounts, you’ll find the terms from Royal Banks are pretty standard.

To qualify for the 4.30% rate you must make 10 point-of-sale debit card transactions and one direct deposit or automated payment every month. Customers are reimbursed for up to $25 in service charges for using other banks’ ATMs.

If you fail to meet the requirements you’ll earn only 0.15% for that month and ATM usage will not be reimbursed. Your privileges will resume the next month that your obligations are met.

Balances over $25,000 earn 1.40% APY

Online applications through the bank’s Web site are available to some, depending on zip code. Others will be sent to: CheckingFinder, where you put in your zip code, find Royal Banks in the Missouri listing, and hit “learn more.” You’re in.

As with any deposit account, the 4.30% interest rate is variable, but Royal Banks of Missouri have offered this rate since May 7, 2009.

Bank of America, JP Morgan Chase and other banks have announced plans to rein in the outrageous overdraft fees they’ve been charging debit card customers.

They’re not doing this out the goodness of their hearts. They’re trying to stop Congress from cracking down on their abusive practices.

But lawmakers shouldn’t be fooled by the modest voluntarily changes the banks are proposing.

New rules are needed to stop the banks from covering the losses on their reckless lending by collecting $39 billion a year in overdraft fees from surprised and unsuspecting checking account customers.

When debit cards were first introduced, banks wouldn’t let customers spend more than they had in their checking accounts.

While having a debit card declined might be a little embarrassing, it didn’t cause any financial harm (and probably got customers to look at their account balances, pronto).

Then banks realized they could make serious bucks by enrolling everyone in “overdraft protection” plans and allowing those transactions to go through — for a price.

The average overdraft fee is now $26, with many banks charging as much as $39.

Customers are never warned that their account is overdrawn and the fee is imposed on every transaction that can’t be covered.

It doesn’t matter whether they’re buying a mink coat or a $4 latte at Starbucks. And to help them charge as many overdraft fees as possible, the banks deduct the largest purchases on any given day first to drain accounts as quickly as possible.

No wonder the same lawmakers who pushed the Credit Card Accountability, Responsibility and Disclosure Act through Washington earlier this year want to do something about overdraft fees.

When those discussions heated up this fall, Bank of America, JP Morgan, BB&T and Wells Fargo suddenly decided customers would be allowed to opt out of overdraft protection and have their card declined.

JP Morgan Chase said it would start posting purchases in chronological order.

Bank of America said it wouldn’t impose fees on accounts that are overdrawn by less than $10; J.P. Morgan Chase, BB&T and Wells Fargo will do the same if the amount is less than $5.

They’ll still impose multiple charges, but Bank of America, BB&T and Wells Fargo will limit themselves to four a day and Chase only three a day.

Gee, thanks guys.

We saved your ass with a $700 billion bailout and you returned that favor by whacking us every chance you got — raising the interest rates on credit cards, slashing credit limits on home equity loans, dragging your feet on mortgage refinancings and modifications.

Fees like this now account for 25% of big bank revenue, according to the FDIC.

Why should we trust you to do the right thing?

Congress should enact sensible rules that require customers to opt in (not allow them to opt out) for overdraft protection, force banks to post charges in chronological order, and limit the number of overdraft fees they can charge.

If we’ve learned one thing from the financial crisis it’s not to count on big banks to show good judgment.

Credit cards spent the summer imposing draconian terms and higher interest rates before all of the consumer-friendly rules Congress passed last spring can take effect in February.

But we may be getting our first glimpse of what life under the Credit Card Accountability, Responsibility, and Disclosure Act might really be like — and it’s kind of promising.

Bank of America is introducing a new “Basic Visa” card this fall that features what it calls “simplified rates and terms” and embodies many of the changes Congress — not to mention its customers — seem to want.

The new card will come with a single page, easy-to-read agreement, not the impossible-to-read booklet-sized contract common today.

Lawyers wrote those huge contracts so that customers would have a hard time spotting and understanding many of the abusive practices that will be banned by the new law such as double-cycle billing and universal default.

The new card will also have a single interest rate for all transactions, not different rates for purchases, balance transfers and cash advances.

That rate — prime plus 14.0%, or 17.25% right now — will be a little higher than most cards have charged for purchases, but lower than they’ve charged for cash advances.

The new law forbids credit cards from applying payments only to that portion of a person’s balance that’s charging the lowest rate.

In fact, it requires payments in excess of the minimum to be applied to the credit card balance with the highest interest rate, taking away a major reason for having tiered rates.

Nor will Basic Visa impose a penalty on users who exceed their credit limit.

Under the old way of doing business, credit cards routinely allow customers to go over their credit limit without warning them, and then slap a fee on them.

Under the new law, cards are banned from charging over-the-limit fees unless a cardholder specifically asks the issuer to complete over-limit transactions.

The new card Bank of America card will be available in October.