Banking institutions and credit unions have long promoted debit cards as a convenient alternative to credit cards. However, consumers are finding out that debit cards are not really as friendly as banks want people to believe. Peter Means, for example, used his debit card as a fallback. He thought it will help him spend his money more prudently.

Turns out that using debit cards did him more harm than good. The bank charged him seven separate $34 fees to cover his purchases when there was not enough money in his account. So even if Mr. Means did comparison shopping and selected the best deals, he still ends up on the losing end. In essence, he paid $6.75 at Lowe’s to get screws and was charged a $34 overdraft fee for it… he paid $4.14 for coffee at Starbucks and was charged another $34 and so on. In total, he spent $238 in overdraft charges for just one day’s worth of transactions.

The $34 fee stated above is marketed as an overdraft protection. But the fees it generates have become a significant source of income for banks especially at a time when consumers are using their credit cards less and are generally cutting back on spending. For this year alone, financial institutions are projected to derive as much as $27 billion because of overdraft fees on checking accounts (usually on checks and debit card purchases that exceed the balance).

It is a fact that banks are now making more money covering overdraft than they do from credit card penalty fees. The reason can be traced to several sources. For one, Americans use debit cards more often. And secondly, some banks manipulate a client’s transactions in a way that will let them incur more overdraft charges. The cascade of fees, as can be seen in the $34 example, can be very quick especially among consumers who can least afford it.

With the financial overhaul surrounding credit cards, banks have found a new way to generate their lost revenue. Debit has become a stealth type of credit. Three quarters of the country’s largest banks with the exception of ING Direct and Citigroup automatically cover ATM and debit overdraft.

The economy might have “bottomed-out”, that is, the worst might be over but for individual victims of the financial crisis, their troubles are only beginning. With their houses foreclosed, their credit on the red, and their future uncertain, there is so much they can do. Majority of these stories are quite sad but some are just heartbreaking. If you are in this situation, the blogs below might be of some help.

JD @ Get Rick Slowly recently updated his blog with the post, “How to Face a Family Financial Crisis?” One of his readers came to him with a problem: his family member is in serious financial trouble. JD advised that he should only spend on the necessities, be brutally honest with him, and consider drastic measures. The blogger further said that it is not a good idea to touch the retirement savings because it might lead to problems in the future.

Adam Baker @ Man vs. Debt wrote a very detailed article, “42 Ways to Radically Simplify Your Financial Life”. Finances need not be complicated if you follow his tips. Among the most useful tips included in the post include consolidating accounts, combining finances if married, freezing credit reports because it minimized the risk of identity theft, using cash, paying bills in batches, and budgeting using last month’s income.

Are you interested in finding out how the financial crisis actually occurred, its implications to ordinary Americans, and why the government bailout became necessary? The Mint Blog featured a visual presentation of the events leading to the worst economic problem since the Depression. The entry, “A Visual Guide to the Financial Crisis” is very helpful.

The challenges being faced by many Americans today might seem difficult to overcome, but it is not impossible. Increasing your financial know-how, following practical tips, and saving money by comparing online travel deals and credit reports can go a long way in improving your finances.

With the deepest recession in the US economy since the Great Depression, the income gap between the well-off in the United States and the average American is becoming to shrink. Ideally, this gap should be closed by lifting up the bottom. But in the trend being seen today, it is shrinking because the top is being pulled down.

According to Ariell Reshef, an economist from the University of Virginia, “Based on experience, it looks like inequality will go down and change the long-term trend of America being a less egalitarian society.” Over the last three decades, individuals occupying top positions as chief executives, law-firm partners, Wall Street bankers, and savvy traders have amassed huge amounts of money. Meanwhile, the income of teachers, office managers, factory workers, and other individuals working in the middle grew slowly.

It is estimated that in 2007, the top 1 percent of US families controlled 23.5 percent of all personal income in the United States. The share of that 1 percent is shrinking fast. It is believed that their income will drop to between 15 to 19 percent of all personal income by 2010.

One significant development that can be seen is the drastic cut in pay for chief executives. In 2008, the median salary of executives listed in the S&P fell 15 percent. However, the effects of the economic crisis and the succeeding credit crunch will go deeper than that. Saving money, for example, has become an important part of an average America’s life.

Finance, for its part, has previously been seen as a lucrative job that attracts top talents. It will not be this way in the future because it will make up a smaller part of the overall economy. The behaviors of Americans will also change. Because borrowing is becoming harder, the focus of many would be debt relief to avoid high interest payments. In any case, there is no doubt that the developments in the last two years will be seen as a watershed for the country’s economic life and American’s lifestyles.

This week, we mainly talked about debt, debt assistance, and finance-related problems. Well, for today’s post, we will take a break from all of that. Everyone can take a breather from their financial troubles. Instead, we’ll provide a list of blogs that can help you save money. Some blogs are witty; some are very informative, while there are others that even give out promotional codes. Hopefully, you’ll gain something from reading these blogs. So below are this Friday’s rundown of recommended blog reads:

Kathryn @ Promotional Codes compiled a list of coupons, deals, and discount codes you can take advantage of. Some of the things you can save on include airfare, gift products, beauty supplies, and pet products among others. There are a lot of fun things you can buy at rock bottom prices.

The Save Money Blog featured a post titled “Is Your Online Time Wasted?” The article basically revolved around the title because it talked about making productive use of your internet time. For example, you can use it for comparative shopping for health insurance and other deals. A good site that provides comparison shopping for credit report, online travel, and even DVD rentals is ComparedForMe.com.

The Not Made of Money blog provided very helpful money saving tips for this week with the article “Five Tips for Tightening Your Budget”. It gives very practical advice about getting your spending under control. You can slash your entertainment expenses, look into your utility bills, learn to do house chores instead of hiring someone, and avoid new purchases.

Bill Shrink Guy recorded his observation about the recession with his article “10 Behaviors that the Recession made more acceptable.” It is a witty blog post that talked about how frugal people rule during the time of recession, while they are dismissed as penny-pinchers during more prosperous times. Frugal behaviors that can be observed today include brown-bagging leftovers, growing your own food, and even bartering.