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Sure, the banks have been hit hard by the recession, but they are enjoying gross profits in one area: overdraft fees. USA Today reports that banks are expected to pocket $38.5 billion in 2009 from insufficient funds and overdraft fees, more than double the amount banks earned a decade ago.

In light of the bad press they have suffered in the past year, banks are eager to re brand themselves as kinder and gentler. A few—including Chase, Bank of America, and Capital One—have capped the maximum number of overdraft fees it will charge any single customer in one day to four. At $35 a pop, this still causes customers in the red $140 a day—a hefty price tag for people who are already suffering financial strain.  This is down from 10 in one day;  Can you imagine getting charged $350 in one day due to overdraft fees?

How Can You Avoid This? Here are two ideas:

• Call your bank and ask that it stop automatically paying transactions that overdraw your account. While they are not currently required to oblige your request (though a federal regulation might make it mandatory in months to come), banks might be eager to please unhappy customers by declining transactions that put your account in the red and saving you the overdraft fee.
• Give yourself a $100 or $200 cushion—at least on paper. Today, make an adjustment to your bank ledger so that your records show that you have $100 or $200 less than you actually have. This will help protect you from overdrafts caused by charges that might have slipped your mind.

Bank of America Consumers Beware

Bank of America is going to start testing what their customers will do if they raise their annual fee on credit cards.

This month and next, about one in every 100 Bank of America customers will received a notice that their annual fees were increased by$70—from $29 to $99. Though the bank’s spokeswoman said the rate increases were assigned to customers based on “risk and profitability,” the truth of the matter is that customers who never carried a balance and always paid on time might have received this notice.

That’s right: customers in good standing who never incurred interest charges, late fees, or over-the-limit fees, but who had low credit scores, might be among the 1 percent of customers seeing a 340 percent increase in their annual fees.

Bank of America isn’t alone. According to the research firm Tower Group, 27 percent of credit card offers included an annual fee, compared to just 18 percent in 2008.

If you are one of the many people whose credit card annual fee has been increased, try this:

• Remember, this is a test that B of A is running,so immediately, call and complain.  Most likely, they will report back to their management that they had to “make an exception” for you.

First Line of Defense: Housing Counselors

Second Line of Defense: Credit Improvement

By now, you know that homeowners across the country are walking away from their homes, unable to afford the payments. What you might not know is that HUD’s Housing Counseling Program provides free foreclosure prevention counseling services to troubled homeowners through 2700 nonprofit agencies.

For those having problems making their payments, housing counselors are the first line of defense. The services offered by these counselors run the gamut from negotiation for loan modifications with banks to helping homeowners establish more realistic budgets. If you are financially strapped and need immediate intervention to stop you from losing your home to foreclosure, visit the HUD website for foreclosure avoidance counselors.

Your next line of defense is to improve your credit score.With a high credit score, you can negotiate for better loan terms and lower interest rates. Regardless of your credit history—even if you have suffered a foreclosure, short sale, or bankruptcy—you can see your score jump to 720within two years of taking the appropriate steps. Here are a couple steps you should take immediately:

• Keep your credit card balance below 30 percent of its limit. Credit-reporting bureaus reward people who keep a low balance month-round. Preferably, your balance would be close to $0, but this might be unrealistic. Aim for less than 30 percent of its limit, and you might see your score skyrocket.
• Comb your credit report for mistakes. Though not all mistakes are detrimental to your score, some—such as an inaccurate credit card limits—could lower your score 40, 50, even 100 points.

For more information, visit the 7 Steps to a 720 Credit Score website.

By Special Guest Blogger Philip Tirone