It’s hard to know exactly how much money kids need for college because so much depends on where they plan to go.

But a new type of calculator is providing much better estimates of how much parents will be expected to pay, and what kind of financial aid a student might qualify for, based on family income and the school’s tuition and housing costs.

A higher education law Congress passed last year requires all colleges to have net price calculators on their Web sites by 2011, and they’re already available at schools including the Massachusetts Institute of Technology, Yale University, Princeton University, Amherst College and Williams College.

The calculators ask for much of the same financial information — such as family income and assets — as the government’s Federal Student Aid program seeks on its Free Application for Federal Student Aid (FAFSA).

It uses that to determine how much each student will be expected to pay. (In college speak, that’s the “Family Contribution.”)

The calculator then shows how much it costs to go there and the financial aid package the school might propose to make up the difference between the family’s out-of-pocket contribution and the total bill.

In an example we ran using Amherst College’s calculator (see above), the school proposes a generous scholarship and modest campus job.

The Massachusetts school was one of the first colleges to stop requiring student loans as part of its financial aid packages. That’s why “Student Loan” shows up as “0″ on the calculator’s final form.

But for most colleges and universities, student loans are a big part of financial aid packages.

Remember when the overheated housing market made it almost impossible for anyone to buy their first home?

Well, those days are definitely over.

During the first three months of 2009, nearly 73% of all homes sold were considered affordable for families earning the $64,000 national median income, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

That’s the highest percentage in the 18 years the index has been published.

The primary reason is that home prices are falling across the country. (It certainly isn’t because family incomes are rising.)

Home values fell an average of 20% from their 2006 peak through the end of 2008 and are expected to drop another 15% to 20% this year. Indeed, the latest report from the National Association of Realtors says the median sales price for homes sold in April was 15% lower than in April 2008.

As a result, the number of homes that the median income family can afford has steadily risen from 53.8% in the first three months of 2008, to 62.4% in the final three months of 2008, to the record high of early 2009.

That’s why first-time homebuyers were able to buy more than half of all the homes sold in March, and more than 40% of all those bought in April.

Indianapolis remains the most affordable major housing market for the 15th consecutive quarter. Almost 95% of all homes sold were deemed affordable to households earning the area’s median family income of $68,100.

The New York-White Plains-Wayne, N.Y.-N.J. region — where only about 21% of homes sold in the first quarter were affordable to those earning the median income of $64,800 — was deemed the least affordable area.

If you’d ask us a week ago, we’d have said ShoreBank in Chicago and Heartland Bank Direct in St. Louis had the top-paying savings accounts.

At the time, ShoreBank was paying 2.45% APY and Heartland 2.30% APY.

We aren’t sure any savings account paying less than 3% should be considered a high-yield savings account, but that’s what ShoreBank calls theirs. (Heartland uses “Performance Savings.”)

And we couldn’t argue with the fact that they had the best rates on savings accounts that are available nationwide.

Then, over the past couple of days, ShoreBank reduced its interest rate to 2.05% APY and Heartland Bank to 2.10% APY.

Now Tennessee Commerce Bank in Franklin, Tenn., and Ally Bank, which used to be GMAC Bank before last week’s name change, have the best high-yield savings accounts — 2.30% APY and 2.25% APY.

How long will it be before those banks lower their rates?

We had hoped rates would bottom out this spring.

But the average interest rate for virtually every type of savings we track with our weekly surveys fell another tenth of a point over the past month.

That’s about how much those rates fell the previous month. And the month before that.

If this is the bottom, we can’t see it yet.

This report from CNN’s “Lou Dobbs Tonight” says the “pay gap between pubic and private workers is exploding.”

It cites a study that says the difference in average compensation — that’s wages and benefits — between federal and private workers grew from 68% in 2000 to 102% in 2007.

The average compensation for federal workers reached $110,450 a year vs. $57,615 for the average private worker.

Why?

The biggest reason, according to CNN, is that federal workers continued to receive pensions and retiree health care benefits that were being reduced or eliminated by private employers.

There’s no reason to expect the trend will change anytime soon since federal workers just got a 3.9% pay raise at a time most private employers are dealing with wage freezes or pay cuts.

“The American taxpayer is paying for exorbitant benefits and compensation and pay scales that are double their own average salaries,” Dobbs says. “That’s the stuff of revolutions.”

Yeah, but shouldn’t some of that outrage be saved for the private employers who keep cutting the pay and benefits of their workers?

And anytime someone talks about fixing the economy you can bet they want to eliminate good paying jobs and make middle-class families work for less.

Is this really the road back to prosperity?

AmTrust Direct has won lots of attention from Bankaholic over the years.

It continues to have one of the top-paying money market accounts in the country, and back in 2006 we praised the awesome 5.51% it was offering on 6-month CDs.

But the online division of AmTrust Bank in Cleveland is overhyping its current CD rates when it says: “Apply online today for some of the best Certificate of Deposit (CD) rates in the nation!”

Amtrust Direct is offering one decent deal: a 6-month CD for 2.00% APY. Although that’s well above the national average for 6-month CDs, it’s not high enough to make our latest ranking of the best rates for 6-month CDs.

Every other CD — from 9-months to 60-months — only earns:

• 0.75% for deposits of $10,000 or less.
• 0.85% for deposits of $10,000 to $25,000.
• And 1.00% for deposits over $25,000.

All of those rates are well below the national average for those CDs.

The bank also urges its customers to “fund a new CD account with ease by simply moving money from your existing AmTrust Direct e-Money Market or e-Savings account.”

That would be a mistake with it’s MMA paying 2.25% — or more than twice as much as any of its CDs.

We think AmTrust Direct needs to raise its CD rates or rewrite its promotional copy.

We know the big bank cards are cutting credit lines and raising rates.

But store cards — the kind you can only use at one retailer — are not a good place to go for more credit.

Don’t be tempted by cashiers that ask “Would you like to save 10% on your purchase today?” every time you check out.

The interest rate on these cards routinely start at 20% or more. Carry a balance for a couple of months and that discount your received will be quickly eaten up by finance charges.

Be especially wary of store cards from furniture and electronic stores that come with offers of “0% interest for 12 months” or “0% interest for 24 months.”

You won’t pay any interest on that sofa or flat-screen television right away.

Customers who don’t repay the entire balance before the time is up are charged interest on the full price dating back to the date of purchase — and at retail store interest rates.

That’s the case even if they have a balance of just $1, or are late with their final payment by just one day.

The cost of homeowner’s insurance was 2.6% higher in February and March than a year ago, according to recent Bureau of Labor statistics.

The Insurance Information Institute projects that the average premium will rise from $820 in 2008 to $841 this year.

I’m sure the insurance industry thinks we should be grateful since it’s foisted much bigger price hikes on us the past couple of years.

Many homeowners along the Gulf of Mexico and Atlantic coasts are already paying twice as much as they did before Hurricane Katrina struck in 2005.

But I didn’t feel all that appreciative when I saw these stats and my renewal notice, which pushed the annual premium over $600 for the first time.

I also know premiums would be going up even more if insurers weren’t making subtle changes in policies that limit their costs if you have a claim.

You’ve also got to watch out for the 4 ways insurers cut homeowner’s coverage.

If you’re facing a big increase in the cost of your policy, you can try to save money by:

• Reviewing your coverage. Meet with an agent or broker to see whether any of the insurance you have for your home is no longer needed.
• Looking for discounts. You may be able to get a discount for insuring your home and car with the same provider.
• Raising your deductible.

Increasing your policy’s deductible will lower the amount you pay for insurance.

It’s great to have money stashed away to pay for all of those holiday gifts without running up big credit card bills.

That’s the advantage of joining a Christmas Club at your bank or credit union.

You make a deposit every month or sign up for a payroll deduction from every paycheck. You can start shopping, and making withdrawals, in October.

What’s not to like?

The lousy interest rates. Christmas Club accounts never pay very much, but they’re particularly Scrooge-like this year.

The University of Illinois Credit Union, for example, is offering a paltry 0.60% APY — and that’s the best deal we know of.

Most Christmas Club members will earn 0.10% to 0.25% APY.

We like almost any program that promotes savings through payroll deductions.

But for banks and credit unions to be promoting Christmas Club accounts with interest rates like these is just shameful.

The fast-food chain is teaming up with America’s favorite serial-dieting talk show host to promote its new Kentucky Grilled Chicken.

The result is the hottest coupon to hit the Web in months: “The Oprah Winfrey Show” free chicken dinner.

Download this KFC coupon and you can get a free dinner — 2 pieces of the grilled chicken and two sides.

The new grilled fowl has just 70 to 180 calories and four to nine grams of fat per piece, which is a lot less than the 130 to 360 calories and eight to 24 grams of fat you’ll find in KFC’s original recipe.

We can only hope this is more successful than KFC’s last foray into healthier eating, the Rotisserie Gold chicken that was tried back in the early ’90s and was supposedly from a “lost” Col. Sanders recipe.

You can print up to four coupons, and it’s good through May 19 with the exception of Mother’s Day (which is May 10.)

But hurry, the coupon can only be downloaded through 9:59 P.M. CDT on Wednesday, May 6.

We don’t think anything paying a pathetic 0.10% should be promoted as a “high-yield” savings, checking or money market account.

Yet lots of banks and credit unions are doing that as they cut rates to virtually nothing on accounts that haven’t lived up to their name for months — if they ever did.

We’re talking about you, Franklin National Bank in Minneapolis, and your “Franklin High Yield Savings Account” that pays 0.10% on deposits up to $50,000 before soaring to 0.13% for balances from $50,000 to $200,000.

And you, First National Bank Texas, and your “High Yield Checking Account” (0.10% on balances up to $10,000).

And you, Members First Credit Union in Manchester, N.H., and your “Cash Multiplier High Yield Savings” (0.10% on balances of $1000 to $5,000. Below $1,000, you earn a big fat 0%.)

And you, Wainwright Bank & Trust in Boston, and your “High Yield MMDA” (0.10% on balances up to $25,000.)

We aren’t fooled.

A new deal between the nation’s best credit counselors and the biggest credit card companies could help more borrowers repay their debts.

The credit card companies have agreed to accept smaller payments, over a longer period of time, when members of the National Foundation for Credit Counseling negotiate repayment plans on behalf of struggling cardholders.

When borrowers who’ve fallen behind on their credit card payments seek help, credit counselors often work out what’s called a debt management plan.

The card companies usually agree to forgive about half of the debt if the customer will repay the rest in monthly payments that cover about 3% of the new balance.

But last year the NFCC found it couldn’t help 400,000 clients because they owed so much it was impossible to negotiate a debt management plan they could afford.

You just know that the next stop for many of those borrowers was bankruptcy court.

To fix that, the NFCC worked out two new debt repayment plans designed to help maxed-out consumers reach a deal with the 10 largest credit card issuers — American Express, Bank of America, Capital One, JPMorgan Chase, Citigroup, Discover Financial Services, GE Money, HSBC, U.S. Bank and Wells Fargo.

They will allow cardholders to stretch the payments out longer, so they can repay only 2% or 1.75% of the initial debt each month.

Now a consumer who agrees to repay $24,000 through a debt management plan could qualify for monthly payments as low as $420, rather than $720.

Of course the credit card companies have the right to review a customer’s finances and determine how quickly they can afford to repay their balance and who will be allowed to take advantage of the new, lower payments.

But if they’ll be reasonable, this could not only help consumers, but cut the credit card companies losses.

(Here’s how to find an NFCC member agency near you.)

We’re awfully taken with the 2010 Kia Soul, which just went on sale this spring.

We admit that part of the appeal are the hilarious ads with the tune-loving, claw-tapping, commuting rodents.

But Bankaholic’s Auto Critic (yeah, we’re full of surprises) has spent some time behind the wheel and thinks the Soul is a good buy. Here’s what he has to say:

“The Kia is about the edgiest thing going, with a wedgy rollerskate shape that’s much more stylish than the slightly odd box-mobiles that have targeted young drivers in the past.

“Scion xB and Honda Element. We’re talking about you.

“But I’m not recommending the Soul strictly for its styling chops.

“Like many Korean models, it’s stuffed with the latest electronic features and safety equipment, yet still carries an aggressively low price. Standard for every Soul (there are four trim levels) are must-haves such as electronic stability control, antilock brakes and six airbags.

“The best buy is the Soul+. Included in its $14,950 base price are air-conditioning, power windows and locks and remote keyless entry, a USB port and Bluetooth connectivity.

“Add the $950 automatic transmission to back its unassuming 142-horsepower, 2-liter engine, and the $400 audio upgrade, and the Soul+ is a mega-cool and frugal compact that goes out the door for $16,995 (that even includes the $695 destination charge).”

Community First Bank of Howard County is offering some competitive CD rates (2.75% for 24 months with a $500 minimum deposit.)

The bank, with three branches in Kokomo, Ind., can afford that because it pays almost nothing on its money market and savings accounts.

How little? Try 0.10%, even on deposits of $500,000 or more.

But what earns First Community this week’s beat down is the special “Piggy Bank” account it promotes to savers under 18 years of age, with no monthly fees and “competitive interest earnings.”

What’s the competitive rate Community First is paying the local kids?

You guessed it: 0.10%.

So go ahead young Hoosiers, entrust your $250 in baby sitting money to Community First and in a year you’ll have earned a whole quarter. Don’t blow it all at one gumball machine.

The letters are going out to homeowners with mortgages serviced by Countrywide Financial Corp.

“We’re pleased to welcome you to Bank of America and Bank of America Home Loans. Your mortgage is with one of the world’s largest and most trusted financial institutions.”

(Trusted? Shares in Bank of America fell 24% Monday after Wall Street saw right through its effort to book a big, first-quarter profit by selling its shares in a Chinese bank.)

The announcement means millions of homeowners will start sending their mortgage payments to Bank of America, which bought the spectacularly failed California mortgage company for $4.1 billion last year.

But that won’t mark the passing of Countrywide Financial Corp. into the history books of financial folly.

Countrywide has been sued so many times its name will live on in the nation’s court system for years.

One of its last acts was to sue American International Group — a legal battle that will undoubtedly show how badly AIG and Countrywide misled borrowers, investors and each other on the way to today’s mortgage and banking crisis.

Countrywide was the nation’s biggest subprime lender, providing hundreds of thousands of borrowers with deceptive adjustable-rate loans they could never afford.

It says AIG has failed to make good on the insurance policies it took out to cover at least some potential losses if those mortgages went bad.

AIG, the world’s biggest insurer, collapsed and is now controlled by the federal government because it wrote so many policies backing loans that were destined to default.

In many cases that coverage was provided through credit default swaps, the unregulated insurance contracts that didn’t require their issuers to have the assets needed to make good on their promises.

So while I’ve written my last check to Countrywide, has AIG?

It will impose higher interest rates on a “small percent” of its cardholders and move some from fixed to variable rates.

Discover wouldn’t tell us how many customers are affected, or how much interest rates are going up.

But the Chicago Tribune says a couple of Discover customers had their rates raised from 16.99% to 19.99% and 11.24% to 12.99%. That’s fairly modest compared to the increases other cards are imposing.

The rate change will take effect for all billing periods beginning on or after May 2. Discover is notifying customers about the increase and will finish notification by the end of April.

As we said, Discover isn’t the only credit card company pushing rates up.

Bank of America, Citigroup. JP Morgan Chase. American Express. They’re all doing it. Even stores like Target are increasing their credit card rates.

But you don’t have to accept these new, higher rates.
If you’re a Discover customer and receive notification that your interest rate is about to increase, you can opt out of the rate increase by notifying the company in writing within 45 days.

You then can pay off your old balance at your old rate. However, you can’t ever use the card again. Make one purchase, and you’ve accepted the new rate.

If you’re planning to renovate your home, Congress included some valuable new tax breaks in the economic stimulus bill it passed this winter.

Unlike a deduction, which reduces the gross income used to calculate how much you owe, a credit comes right off the bottom line of your tax bill. So while a $1 deduction might cut your taxes by 25 or 30 cents, depending on your tax bracket, a $1 credit will reduce what you owe the government by a full $1.

The stimulus bill created two types of energy credits.

The energy efficiency tax credit covers improvements to existing homes, from new windows and furnaces, to additional insulation in the attic.

Homeowners receive a credit worth 30% of what they spend on materials, and some installation costs, up to a limit of $1,500, for purchases made in 2009 and 2010.

The renewable energy tax credit is for adding geothermal heat pumps, solar water heaters, solar panels, fuel cells and windmills to new or existing homes.

This credit is for 30% of the total cost of the project, including installation. There’s no limit on how big the credit can be and it doesn’t expire until the end of 2016.

The government’s Energy Star Web site has all the specifics on the projects and products that qualify for both credits.

Click here for a summary of all of the tax credits and other consumer benefits in the economic stimulus plan.

Stephen Colbert dove into the fray over slimy lending last night with an hilarious look at the “Payday Loan Reform Act of 2009″ introduced by Rep. Luis Gutierrez, a Chicago Democrat.

“These days, credit is harder to come by than a brunette on Fox News,” he says on Comedy Central’s “The Colbert Report.”

But a “great source of quick cash (is) payday loans. If you need money now, you can borrow against your next paycheck at annual interest rate of only 400 to 800 percent. That is a great deal for anyone who gets a weekly 2,000 percent pay raise.”

Colbert noted that Gutierrez wanted to ban the costly loans until a payday loan company became the largest contributor to his re-election campaign. Now he’s seen the light and wants Congress to approve annualized interest rates of up to 780%.

In his role of conservative pundit who hates government regulation, Colbert concludes: “I like this bill because it legitimizes the payday loan industry by dragging it out of the darkness and into the anemic firefly flicker of nominal oversight.”

Could this Colbert Report report segment also introduce the phrase “debt pineapple” into the nation’s financial lexicon?

Once upon a time, credit cards were the best way to guarantee the best exchange rate and avoid fees when making purchases internationally.

But unlike most fairy tales, this one does not have a happy ending.

Most banks that issue Visa and Mastercards now assess a “foreign transaction fee” — 3% is pretty typical — on purchases made outside the United States.

It usually includes the 1% fee MasterCard and Visa have begun charging to convert purchases made in foreign currencies into dollars.

Most galling is that many banks even impose the fee on foreign purchases made in U.S. dollars, a common occurrence in the Caribbean.

You’ll have to read the fine print in your credit card’s disclosure statement to find out exactly how much you’re being charged — unless it’s from Capital One.

None of its cards impose foreign transaction fees. Capital One doesn’t even pass the 1% fee charged by Visa and MasterCard fee on to its customers.

That deserves some big-time kudos.

If you’re planning an overseas trip this summer it might even pay to get a Capital One credit card just to avoid the costly fees other credit cards assess.

We think the Capital One No Hassle Miles Rewards card is one of the best deals around.

It offers no annual fee, 0% APR on purchases for one year, no fee for balance transfers and a generous system for earning points toward airline tickets.

The American News Project has produced this report on how banks are employing a roomful of lobbyists to stop Congress from banning the credit card industries worst abuses.

And when I say a roomful of lobbyists I’m not exaggertaing. ANP has tape of them crowding into a congressional hearing. When an opponent is asked how many consumer lobbyists were in the room he says, “Three.”

It gives a good sense of how money buys power in Congress — and no one has more money or more power than the banking industry.

After an industry supporter warns the new protections backfire on consumers and lead to higher interest rates and less avialable credit, I just want to scream, “What!”

Doesn’t he know the banks are already raising interest rates and cutting credit limits on millions of cardholders.

That’s part of the problem.

Again. This time the letters have gone out to cardholders who carry a balance on accounts with an interest rate below 10%.

They’ll see their interest rate increased “to the low- to mid-teens” in their June statements, according to spokeswoman Betty Riess.

Bank of America says it has to do this because the cost of providing credit has significantly increased. “In the current environment, the portion of the portfolio that’s under 10% is underpriced relative to current market conditions,” Riess told us.

Really? The Federal Reserve is flooding banks with cheap money and CD rates are pathetic. So it’s hard to imagine that the cost of raising money is the problem.

A rising default rate is the only reason Bank of America’s costs could be going up. And if it that’s the problem, then what does it think will happen when it imposes higher rates on customers who are carrying a balance?

Cause more defaults, perhaps?

Of course Bank of America isn’t the only credit card provider raising rates.

Citigroup. JP Morgan Chase. American Express. They’re all doing it. Even stores like Target are increasing their credit card rates.

But that doesn’t mean you have to accept a rate increase.

Customers can opt out by notifying Bank of America in writing or by phone using the contact information provided in the rate increase notification letter.

You can then pay off your outstanding balance at your existing rate, but the account will be closed and you can’t make any additional charges on the card.

If you make just one purchase, or allow one automated charge from your gym or parking garage, then you’ve accepted the new terms, voiding whatever you may have done to opt out.

Another option is move that debt to another credit card offering a good rate on balance transfers.

Check out, for example, the Pulaski Bank Visa card’s great deal — no balance transfer fee and 0% interest for 6 months.

It pays 0.95% APY whether you invest $1,000, $10,000 or $100,000.

That’s well below the national average of 1.57% for two-year CDs and comes from the latest acquisition of Wells Fargo & Co. — the big San Francisco-based bank that delighted Wall Street this week when it reported earning $3 billion in the first quarter.

The Dow Jones Industrial Average soared nearly 250 points and Wells’ shares rose almost 32% on Thursday.

But should we be all that surprised when the Federal Reserve is flooding commercial banks with cheap money — and allowing them to pay savers such shockingly low rates?

Take a look at this chart we pulled from Wachovia, the Charlotte, N.C.-based bank Wells Fargo took over in January.

Every certifcate of deposit it lists pays less than 1%, including that 24-month CD with a minimum deposit of $100,000.

No wonder Wells Fargo said “strong operating results” at Wachovia helped boost its profits.

Bottom line: Don’t even consider buying a standard-term CD (such as the 6-month, 12-month, or 24-month CDs above) from Wachovia. You’ve got to take advantage of the specials on odd-term CDs.

They may not be the best deals around, but what would you rather have: 1.90% for a 17-month CD or less than 1% for a 12- or 24-month CD.

The government has finally confirmed what many private economists and consumer groups, not to mention millions of frustrated homeowners, have been telling us.

Lenders simply aren’t serious about modifying unaffordable mortgages.

The Office of the Comptroller of the Currency and the Office of Thrift Supervision studied 35 million mortgages and found that only about a third of the modifications made in the final three months of the year reduced the payments by more than 10%.

Incredibly, nearly one in four modifications actually increased the payments on borrowers who approached their lenders for help.

And this was after the Bush administration committed $750 billion of our money to save the banking industry from collapse.

It was also after the banking industry and its HOPE Now campaign repeatedly claimed it was doing so much for borrowers with deceptive adjustable-rate loans save their homes from foreclosure.

Ha.

The mortgage servicing companies and investors who own most loans have done precious little to fix the recession-causing, job-wrecking, foreclosure-exploding mortgage crisis they had a big hand in creating.

It also goes a long way toward explaining why so many modified mortgages have fallen back into default.

The study found that half of modified loans in which the payment was unchanged or increased were late again within nine months, compared with only one in four loans that had their payments lowered by 10% or more.

Note to President Obama: Stop giving the financial industry billions of taxpayer dollars and if it keeps treating us like dirt.

It’s a gimmick. But as gimmicks go, I like this one.

The California Association of Realtors is offering to pay first-time buyers’ mortgages for up to six months if they lose their jobs.

The program is intended to reassure buyers that they won’t face foreclosure if they lose their job during the recession, which has pushed California’s unemployment rate above 10%.

To participate in the Housing Affordability Fund Mortgage Protection Program, you need to be:

• A first-time homebuyer who closes before Dec. 31, 2009.
• Employed and eligible to receive a W2 tax form. You can’t be self-employed.
• Under 70 years of age.
• Using a California Realtor and buying a primary home in California.

What you get is an insurance policy much like the home warranties sellers often provide buyers that guarantees a home’s major appliances for the first year of ownership.

In this case, the policy is provided by your real estate agent and provides up to $1,500 a month, for six months, to help pay your mortgage if you’re laid off or are out of work because you’re injured in an accident. (Illness is not covered.)

It’s free. The agent pays the premium. You just have to ask for an application.

The California Realtors expect 3,000 households will receive assistance through the program this year.

Of course Californians have a much better incentive than this to buy now.

California home sales were up 83% in February (over February 2008) because the median selling price for single-family homes was down 40.8%.

Let’s opt out of “overdraft protection”

Congress and the Federal Reserve are considering new rules or laws that would stop banks from signing checking account customers up for costly and unnecessary overdraft protection without their permission.

It’s about time.

When debit cards were new, customers weren’t allowed to overdraw their accounts.

If you went to a store or ATM, and tried to spend or withdraw more money than you had in your account, the transaction was denied.

But that didn’t generate any money for fee happy big banks, so they began enrolling customers in “overdraft protection programs” to save them from potential embarrassment and inconvenience.

According to the FDIC, 86% of banks have overdraft programs and about 75% of those enrolled customers without asking them.

Instead of declining a purchase or ATM withdrawal for insufficient funds, banks allowed those transactions to go through, imposing an average fee overdraft fee of $34 on each and every time.

Most customers aren’t even aware that they have overdraft protection until they drain their checking account for the first time and get hit with a string of fees. They’re shocked to find that they’ve racked up hundreds of dollars in penalties buying $4 lattes and $3 Big Macs at Starbucks and McDonalds.

No matter what spin the banks put on it, overdraft protection wasn’t created to help consumers. They were setting a trap to boost their revenue.

Young and low-income customers, those most likely to be living paycheck-to-paycheck, are also the most likely to pay overdraft fees, according to the FDIC survey.

Of course customers can always call their bank and “opt out” of overdraft protection.

But the new government rules would require customers’ approval before they’re enrolled.

The banks don’t like that because they’re afraid lots of customers will say “no,” and they’ll lose billions of dollars in fees.

But it’s the right thing to do.

Here’s why you should never trust your savings to offshore banks.

Millennium Bank, based in St. Vincent and the Grenandines, started advertising suspicously high CD rates back in 2004. And it wasn’t shy about going after the big money, placing ads in glossy magazines aimed at wealthy consumers.

Millennium typically offered 1.5 to 2 percentage points more than the best deals you’d find at FDIC-insured banks — a premium that’s seemed to be carefully calculated to be alluring but not alarming.

Its highest rates were reserved for big deposits ($25,000 or $100,000) put into “premium” long-term certificates of deposit — four or five years — that absolutely could not be redeemed until maturity.

Millennium claimed to be the subsidiary of a Swiss bank — something the secretive Swiss embassy in Washington wouldn’t discuss with us when we called to check and we could never find out who was behind the bank.

Until now.

The Justice Department has charged William Wise of Raleigh, N.C., and Kristi Hoegel of Napa, Calif., with running a $68 million Ponzi scheme and shut Millennium down.

“None of the investor funds were used for any investment purpose,” according to a Bloomberg News report on the closing. Instead, defendants took a “vast majority” of the money, while using a portion to pay purported returns.

One final thing. Don’t confuse this fraudulent bank with the Millennium Bank that has four branches in northern Virginia.

Its FDIC insured and offering CD specials — 2.70% APY for 14 months, 2.50% APY for 9 months — that are legit (but only available to customers in Virginia, Maryland and the District of Columbia).

“This is weak man.”

That’s how the hilarious E*Trade Baby would undoubtedly describe this offering from the online broker’s banking operation:

1.00% APY on certificates of deposit ranging from 12- to 24-months.

Just drop $1,000 into your E*Trade CD, watch compound interest work its magic for a year, and take your hard earned $10 to Taco Bell. Or you can wait two years, double your earnings, and trade up to Applebee’s.

We can’t believe anyone would consciously buy CDs that don’t even earn the pathetic average returns we’re currently seeing on 12- and 24-month CDs (1.35% and 1.60%).

But if you allowed an E*Trade CD to expire and be automatically rolled into one of these lousy investments, you need to take the Baby’s advice: “Take control. Rise up.”

Under pressure from New York Attorney General Andrew Cuomo and a class action law suit, J.P. Morgan Chase will drop a $10 a month fee it imposed on 184,000 credit card customers earlier this year.

It will also refund the $4.4 million in fees it’s already charged customers since January.

This was one of the most egregious examples of a bank mistreating its credit card customers that we’ve seen and prompted an angry backlash against Chase.

The fee was levied on cardholders who’d carried a significant balance for more than two years at low promotional rates.

Most of those customers had responded to ads that promised to charge no more than 4.99% for the “life” of the loan on balances transferred from other credit cards.

Customers who called to complain about the new fees were told they wouldn’t have to pay if they accepted a higher 7.99% interest rate.

Chase was reneging, plain and simple, and trying to force those customers to pay a higher rate.
It also raised the minimum payment for those customers from 2% of the outstanding balance each month (plus interest, of course) to 5% of the balance.

That change remains in place.

The fact that Chase had to be forced into honoring its commitment to these customers shows how the big banks still don’t get it.

So let me try and explain to JPMorgan Chase CEO Jamie Dimon and all of his buddies why consumers are so angry at the banking industry in the simplest possible terms:

You’re being saved from your own greed with billions of dollars from the nation’s taxpayers, so stop abusing those taxpayers who also happen to be your customers.

It doesn’t make us want to help you.

Many of the nation’s biggest banks actually made fewer loans at the end of 2008, even though they had received $148 billion in bailout money from the federal government.

According to an analysis by the Wall Street Journal, outstanding loan balances fell $46 billion at 10 of the 13 biggest beneficiaries of the Treasury Department’s Troubled Asset Relief Program, including Citigroup and Bank of America.

The banks argued that they couldn’t be expected to turn all of that taxpayer provided capital into new loans overnight. It takes time to find and make prudent loans, especially in the depths of a serious recession when so many consumers and businesses don’t even want to take on new debt.

Yet two-thirds of all banks increased their loan portfolios in the final, dismal months of 2008, so someone was out there borrowing.

And when we look at the interest rates big banks are offering on many types of loans, we have to wonder how serious they can possibly be about expanding their portfolios.

Just this week, for example, Bankaholic’s crack research staff was comparing rates on $30,000 home equity lines of credit for borrowers with good credit (FICO scores of between 660 and 749).

Here’s what it found in four markets:

Huntsville, Ala.: 3.25% at Colonial Bank vs. 6.75% at Wachovia

Reading, Pa.: 3.25% at Nationwide vs. 6.74% at Bank of America

Flagstaff, Ariz.: 3.25% at Nationwide vs. 7.12% at Wells Fargo

Cleveland, Ohio: 2.99% at Dollar Bank vs. 5.49% at U.S. Bank

Bottom line: Another quarter is almost over and we often find the big banks aren’t offering the kind of competitive rates that would result in lots of new loans.

(They aren’t offering very good rates on deposits either. See our most recent “Worst rate of the week” for a sorry example of that.)

We can only hope the big banks’ first quarter earnings reports show they are finally putting all of that government money to work, making more loans and boosting the economy.

Let’s face it. Rates really suck right now.

It’s hard to get excited about building a nest egg when even the most lucrative CDs, savings and money market accounts are only offering 2% or 3%.

But maybe you’ll be able to whip up a little more enthusiasm after seeing our pick for the worst rate of the week.

JPMorgan Chase Bank, take a bow.

As you can see, Chase Money Market Savings is paying 0.01%.

Drop $10,000 into your MMA, let the interest compound daily, and a year from now you’ll walk away with $10,001.

If you have a “relationship” with Chase — which means you also have an active checking or credit card account — the interest rate doubles to 0.02% and your balance would grow to $10,002.

What kind of a relationship is that? Disfunctional, we’d say.

And it gets worse.

The minimum deposit is a mere $25 but if you don’t maintain a balance of $1,500 (or have a checking account) you’re hit with a service fee of $12 per month.

Some unwary customer could put $1,000 into this MMA and find they only have $988 a month later.

Makes those 2% to 3% returns from places like Charter Bank, AmericaNet, ADB Bank and Beverly National Bank look a little better, eh?

… To convert your traditional IRA to a Roth IRA.

This is one of the few, small advantages we can think of to the big decline in stock and mutual fund prices.

Since you contributed pre-tax dollars to a traditional IRA, you must pay ordinary income taxes on your contributions and any earnings when you convert to a Roth IRA (because Roth IRAs require contributions of after-tax dollars).

Converting when your IRA is worth less means you owe less tax.

Let’s say you’re in the 28% tax bracket and converted your traditional IRA back when it was worth $45,000. You’d owe $12,600 in taxes. But if your IRA is only worth $30,000 now, the tax bill would be only $8,400.

This year, you can convert a traditional IRA if your adjusted gross income (gross income minus income tax deductions) is less than $100,000 whether filing singly or married filing jointly.

The full amount you owe in taxes is due with your 2009 return.

If you wait until 2010 the rules get a little better.

The income limitation disappears and you can pay the taxes on the conversion in two equal installments in 2011 and 2012.

But if the stock market rebounds over the next year, you’ll pay more in taxes.

Are you feeling lucky?