At a time when people are paying down their credit, some consumers are turning to their debit cards. When they overspend on their debit cards, banks make money from overdraft fees.

This year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer’s balance.

When you hit your limit on a credit card, your charge may be denied. When you hit your limit on a debit card, you are hit with fees for spending more than is in your account.

To avoid fees, if you bank doesn’t enforce a minimum amount, create your own minimum, so instead of your actual balance at zero, consider your minimum balance as $200 or so, just enough to make some small purchases and won’t have to pay a fee.

Overdraft protection fees are great sources of income for banks. When ATMs and debit cards were first created, users who didn’t have enough money had their requests denied. Now since some cards are associated with Visa and MasterCard there is the option to charge something using the same card.

According to the F.D.I.C. study, a $27 overdraft fee that a customer repays in two weeks on a $20 debit purchase would incur an annual percentage rate of 3,520 percent. By contrast, penalty interest rates on credit cards generally run about 30 percent.

Thirty percent! No one would want to pay 30% for a charge, but overdraft fees may be as high as $35 for each charge.

Ideally, if you don’t have the money in the account, then a bank should not allow the transaction to go through. This isn’t what happens. Have a debit card? Find out about your bank’s overdraft policy. Ask whether or not you will be automatically charged if your balance falls below a certain amount. If so, then start using cash for small purchases if they are the ones that make you spend then don’t make any small purchases. Knowing that the overdraft fee annual percentage rate exceeds 3000% makes it more difficult to just use a debit card with reckless abandon. A credit card would be better in some instances, especially if you know you can pay the amount within a month.

Consumer confidence is on a roller coaster. One month it is up another it is down. Since the information is based on a small survey of 5000 people this only gives a small amount of people who are confident that the economy is improving.

Consumer confidence “appears to be back on the mend,” said Lynn Franco, head of the consumer research center at the Conference Board, which is a private research group.

If the majority of the people who were surveyed were in an economically depressed area, I think the responses and numbers might be higher. Though the increased consumer confidence is a positive economic boost since 2/3 of our economy is based on consumer spending, the more people spend, the better the economy will fare. Also announced today people have been paying their credit cards off, but not their mortgages. More mortgages have been entering the 90-day delinquency stage but credit card debt is decreasing.

This is also how the economy became troubled initially, too much consumer spending that people couldn’t afford.

Confidence also depends on employment status as well. For those who are employed and able to pay all of their bills there is more likelihood that they will see the economy improving. The un- and underemployed might have a different take on the economy if they cannot afford to buy what they really need (or even affordable nonessentials).

This month the consumer confidence is up and it may keep rising. Consumer confidence is personal. Those who can afford what they need and some of their wants are those who are most confident.

Financial experts are making changes in their advice about saving, spending and dealing with debt.

Suze Orman is urging people to pay the minimum on their credit cards and save some cash.  This is an about face to the advice she was giving before. Now Suze is telling people as part of her recession information to just pay the minimum.

Say what? Contrary to every bit of advice that anyone has about credit cards, Ms. Orman is recommending to people who are in financial straits to pay just the minimum payment, and do not use their credit cards any longer. This way there is still a line of credit if necessary and the money that is in savings can be used to pay bills, if the person is unemployed or underemployed.

Paying only the minimum does not get you out of debt any faster but does allow you to keep your head above water.

Making only the minimum payment seems silly and keeps you in debt, but if you are using the money to pay off other necessities, prioritizing your debt, then there is a chance to keep your credit card accounts. Paying them off, might mean that your credit limits will be reduced.

Suze is the only financial advisor who is giving this advice openly. Many will say pay what is necessary such as mortgage or rent and utilities, etc. Paying the minimum amount keeps people in debt and the credit card companies in business.

Is Suze giving the right advice to only pay the minimum?

If you are delinquent on your credit card bill, it may not be Monty Hall calling to make a deal, it may be your credit card company.

The delinquency rate on credit cards has risen, as have calls from credit card companies to people with high balances. Companies are trying to make deals with people in order to get something rather than nothing.

Even with settling for less than the entire amount, there are still high balances around.

“Revolving credit, a close approximation of credit card debt, totaled $939.6 billion in March. The Federal Reserve reported that 6.5 percent of credit card debt was at least 30 days past due in the first quarter, the highest percentage since it began tracking the number in 1991. The amount being written off was also at peak levels.”

Credit brings a different dimension to this recession.  The unemployed and under-employed do not have as much to lose. When you aren’t making any money, your wages can’t be garnisheered. This does not mean forgoing payment. Although no one can say, yet, how taking a deal from a credit card company will affect your future credit or credit score.

Remember to be diligent about checking your credit card bills and other statements. Additional charges may be added to your bill by either human error or just as a test by scammers to see if the charges go unnoticed then you r account may be charged for a larger amount at a later date.

Double billing and errors happen. Check your bill often, even between payments to see what charges are being added to your bill. If you believe that you are charged twice for something that you ordered, contact the merchant to try to straighten out the situation. Generally, reputable places can check their records. If this does not work, then go to the credit card company.

Notice a charge that you did not make? Directly contact your credit card company.

Phishing scams are on the rise, because of the economy but some crimes are either not reported or not detected for a while. Even additional charges may be added to your cell or home phone bill. Always check to see if additional services are added mistakenly. This is especially true if you have automatic payments charged to a credit card or deducted from a checking account. I had an automatic deduction made from an account for a mortgage before and more money was being taken from y account than it should have been. The amount was very small and was added to my mortgage as additional principal. Sometimes the amount deducted may be keyed in incorrectly and could make you have to pay additional late charges. If you have proof that you have automatic payment and that it was an error on their end, then you may have to go through the hassle of straightening it out, but you will receive a credit.

 Be diligent in your own finances.