Scott Fedyshyn and his wife recently brought home a bouncing baby boy -- and an unexpected $600 medical bill.  But Fedyshyn, a trained billing consultant, fought back. He demanded itemized bills from his doctor explaining each charge, and why his health insurance wouldn't cover some items. 

Soon, he got another statement from the doctor's office – but this one came with a $20 refund check.

Billing errors are common, experts say. Double-billing, typos, upselling, and outright fraud add up to big unexpected medical bills for consumers -- even those who think they are fully covered by insurance.  A complex web of bills, forms, and other paperwork mean a lot of Red Tape for health care, and often leads to overpayment by consumers. 

Fedyshyn's tale is typical, and simple.  A few weeks after the birth of his son, now 10 weeks old, he received the bill.

"It said, 'Amount due: $600.' And there was no real explanation for it," the 29-year-old from Virginia said.  "I said I wanted a line-by-line breakdown of what was not covered and why."

When he received the breakdown, the reason for the discrepancy was obvious: an ultrasound image of the baby that insurance refused to pay for. The physician's billing department had coded the procedure as if the Fedyshyn family had requested an extra – and unnecessary -- baby image during their initial visit. But in fact the doctor had ordered it because their child was facing the wrong direction when the first "picture" was taken, and the doctor wanted a second look.

"So it should have been covered," Fedyshyn said. "After going back and forth a bit, it was changed."

These kinds of small errors in billing and coding can lead to big bills for patients, said Candy Butcher, CEO of the Medical Billing Advocates of America.  Her firm trains advisors who sell medical billing audit services to consumers.  Most work on contingency basis, taking 20 to 40 percent of the refunds they earn for clients.

"Eight out of 10 bills we see have some error," she said.

Harvard Professor Malcolm Sparrow, author of "License to Steal: How Fraud Bleeds America's Health Care System," said many medical bills seem arbitrary.

"Insurance companies and medical provider billings seem to bill on the basis of 'let's just see what we can get away with,' knowing that many consumers are too timid to question them," he said. Recently, when he questioned a bill, he was immediately offered a $200 discount as a "professional courtesy."

"I took it as sure evidence that (the provider) knew the original bill was unjustifiable," he said. "A sign of how aggressive the billings are would be the apparent ease with which they back off and adjust their demands when called to justify them."

All about coding
Errors can occur in many ways. In Fedyshyn's case, the doctor's office had incorrectly described its treatment to the insurance company when it "coded" the procedure. Each separate medical procedure, treatment, or drug given to a patient is recorded by the doctor or hospital in software, boiled down into a short numeric code. When providers miscode, insurance companies often reject the bill, and the patient can end up paying the difference. It can be easier for doctors to send patients a bill than to resubmit insurance claims.

Robert Tennant, senior policy adviser for the Medical Group Management Association – a trade group that represents physicians – said it's hardly fair to lay the blame for overbilling on doctors. The complexity of billing procedures is a breeding ground for mistakes, he said.
"With the thousands of health plans, complications galore, the lack of standardization, it's inevitable that this is going o be the outcome," he said. 

Here's one glimpse of the tortured billing process doctors face. After a visit, doctors code a patient's ailment using a standard called ICD-9 (International Classification of Diseases).  Currently, doctors must choose from about 17,000 possible codes. There are nearly 10 codes just to signify an ankle sprain, for example. But such coding can still be inexact, and many ailments must be squeezed into one designation or another. It's obvious how errors might occur.

In an effort to improve the precision of the codes, the Department of Health and Human Services (which manages the coding standards with Medicare) has added a host of new designations – there will be 155,000 possible code diagnoses soon.  The new system will allow for recording of far more granular details:  for example, whether a laceration to the head was caused by an ice hockey stick or a field hockey stick. Doctors must implement the system by 2013. An average small doctor's office will have to pay $84,000 just to upgrade their systems to handle the new coding scheme, Tennant said.

"It's a very complicated process," Tennant said.  "And it's going to get even more complex." Blue Cross and Blue Shield, for example, expect coding errors to increase 10 to 25 percent in the first year of the new system.

The penalty to physicians for incorrect coding is severe: Generally, insurance companies will deny all claims with coding mistakes.  And that's just one of the roadblocks to payment that can spring up along the way.  Others abound. There are, for example, about 1,200 potential claim forms used by health insurance companies.  So while doctors must wait until long after they have provided care to receive payment – try that with your auto mechanic – consumers end up utterly confused when they look at their bills, and often don't even know how to begin questioning costs.

"What we're getting at is the question of transparency," he said. "As a patient, you might ask, 'Why can't I just see how much it costs for a medical procedure?'  Well, because it's very obscure even for the provider … and the reality is because it's so complicated errors do occur."

RED TAPE WRESTLING: Four steps to fair billing
Fedyshyn, who managed to get a refund from his physicians, knew the right questions to ask because he's a consultant who challenges balance sheets for a living. But many consumers just pay their bills, happy to be healthy and feeling they don't have the expertise to challenge complex hospital stay bills, Butcher said. Many consumers could do just as well as Fedyshyn, however, if they took a few simple steps during and after their medical treatments, she said. Her tips:

1. Always request a "detailed itemized statement" from a hospital or doctor.  Most will provide only a summary statement unless asked.  The detailed statement is the foundation for any bill challenges.
2. Nothing is routine.  On that detailed statement, many consumers find unfair or excessive charges for routine items like gowns, toothbrushes, gauze, and so on, Butcher said.  Many times, those items are supposed to be included as part of room and board or operating room charges.
3. Kits for procedures are often a source for overcharging, she said.  For example, she's seen separate bills for scalpels when patients are also being billed for operating kits that include the scalpel.
4. Clerical errors. Sometimes patients are billed for medications for days after the doctor stops administering them, for example. Or four X-ray charges end up on a bill when only two are taken.

Naturally, many consumers are in no position to track all these things during their health care stay.  But the original doctor's orders for all procedures should be available to a patient through a request for medical records.  Many times, patients should request those records after they receive their initial Explanation of Benefits (EOB) form from their insurance company, which show what costs are covered by insurance and what kind of bill to expect from the doctor or hospital.

Once a discrepancy is suspected or found, Butcher recommends patients go directly to the supervisor of the billing department at a hospital.  She suggests patients send a certified letter with evidence of the error, and state clearly a desire that the item be placed "in dispute" and a request for a "30-day hold" on the payment process. That should stall any potential collections activity while the dispute is worked out.

Don't be afraid
Challenging a doctor's bill is easier said than done, however. Many consumers feel reluctant to challenge their physician's authority, particularly if they have an ongoing relationship with him or her. Even Fedyshyn said he'd gulped hard after raising an issue with a different pediatrician over tests that had been ordered which weren't covered by insurance.

But Butcher said that shouldn't be a concern. Virtually all doctors she's worked with have been helpful when errors are brought to their attention.

"Physicians most of the time have no idea what goes on with the billing process. ...This has nothing to do with the care that is provided," she said. "It has to do with people hired to work in the billing department and the coding of items. When we bring things to the attention of physicians, they have been more than willing to adjust it off the bill or give some kind of credit. So people should not be afraid to bring it up to their physician."
Naturally, most consumers don't pay a lot of attention to hospital bills unless their explanation of benefits statement indicates they will face a big out-of-pocket expense. But Butcher said patients should scan their bills carefully even if they are fully covered. It pays to watch out for overpayments by the insurance company, she said.  Why?

Consumers can run into annual caps and find themselves forced to pay at the end of the year -- or worse.

"Most policies have a lifetime cap, and if you have a terminal illness, it's very easy to meet that lifetime maximum," she said.  "Even though it may not benefit you financially now, you should still look over those bills. If the insurance company pays something they should not have, in the long run, that could hurt you, too."

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Here's one way to get a slice of all that bailout money that's being thrown around by the government: buy a car. U.S. automakers are desperately trying to stimulate demand, and there are remarkable rebates on some models. To list a few: Chevy Trailblazer and Dodge Magnum,$3,000; Ford F-350, $3,500 ; Hyundai Veracruz and Nissan Titan $4,000. GM is right now offering the mother of all rebates, at $5,000 off a Hummer.

But that's nothing, says Edmunds.com Consumer Advice Editor Philip Reed. A friend of his recently bought a Chrysler Town & Country minivan for $12,000 off MSRP, after all rebates, dealer incentives, and downright price slashing occurred.

"You can get outstanding deals," Reed says. "If you need a car, and you are secure in your job and have the money, then yes, this is a great time to buy a car."

Of course, you might notice something in common about all those cars I've just mentioned: none of them would be mistaken for a Toyota Prius at the gas pump. In other words, huge rebates are available on cars few people want.

But don't let that deter you. The automobile industry is under intense economic pressure now, and that means consumers have serious bargaining power. Dealerships are facing their own cash crunch and need to get rid of inventory even more than usual. That means they are willing to share their secret "dealer cash" – incentives they get from automakers - with buyers just to get cars off the lot. Meanwhile, even some smaller, foreign car models have usually high rebates. Nissan is offering $2,250 off Sentra, for example.

"At this time you might as well ask for the stars and the moon," says Jonathan Linkov, managing editor for automobiles at Consumer Reports. "You will at least get a star or two."

It all adds up to this: If you have the money, it's a fantastic time to buy a new car. It's so good that if you've never been the type to buy a brand new car, now might be the time to start.

There are reasons to be anxious about buying a new car. What if the manufacturer disappears? Both Reed and Linkov think that it's very unlikely for an automaker to go under so completely that it wouldn't be able to honor warranties. It's more likely that individual brands – like Saturn - will be shut down, with warrantee coverage sliding to other brands. Parts supplies shouldn't be a problem either, given the similarity of engineering among cars, and the availability of aftermarket parts. But consumers who cherish the convenience of having repair work done by a nearby dealer should think twice before pulling the trigger. There are no guarantees that dealership will be in business three years from now.

Still, the deals are so aggressive, anyone who's considering a car purchase should really test the new-car market. Before we get to the down-and-dirty details you need to protect yourself from the shark-infested waters of showroom, here's a few basics on how to save money.

Don't buy a new car!
Of course, the easiest way to save money is not to buy a car. The economic downturn has reversed a lot of financial equations for consumers, like the old "time is money" axiom. Perhaps two years ago, $35 for an oil change might sound like a bargain. Today, it might sound like a waste when you can do it yourself for $10 and an hour's time. If your economic situation has changed for the worse, you'll likely be joining the ranks of do-it-yourselfers who baby their cars and hold onto them longer. You won't be alone.

J.D. Power & Associates said in January that used cars traded in to dealerships were on average 6.3 years old - a half-year older than just two years ago. That means consumers are becoming a little more familiar with auto parts supply chains Pep Boys, and Schuck's, and that's probably a good thing. Many community colleges offer inexpensive classes on basic and intermediate auto repair. If you have found yourself with some unwanted free time thanks to a change in employment, learning how to perform tune-ups and other vehicle maintenance could be a great investment. The engine you save may be your own.

The second best way to save money buying a car is to buy someone else's car. Everyone knows the second you drive a new car off the lot, 20 percent of the value disappears in an instant, by some measures. This vicious depreciation leads some to believe that there is no way to get a good deal on a new car. U.S. consumers who aren't holding on to their old cars are more frequently opting to buy someone else's old car instead. Dealer sales of one-year-old cars have jumped from 11 percent of total sales to 16 percent in the past year, according to Edmunds.com. The auto research site also says 500,000 would-be new car buyers from December to February switched to used cars instead.

Now's a good time for new
This might be a penny-wise and pound-foolish decision, however. Every car deal is different. Because different models depreciate in different ways, it's impossible to give one-size-fits-all advice about the new vs. used car debate. Naturally, if your budget limits you to a $3,000 point-A-to-point-B car, then used cars are your answer. But if you were thinking of paying $10,000 or more, let me try to convince you to at least consider that new car smell.

We'll start with the obvious. Perhaps your new Ford will lose $3,500 when you drive it off the showroom floor, but if you're getting a $2,500 rebate, that gap has closed considerably.

Then there's the issue of market forces. Buying a new car and buying a used car are fundamentally different. Buying new is akin to shopping for a new television -- they're everywhere, they're easy to compare, and if someone buys the set you were about to pull off the rack, there's always another. And most important, price comparisons are part of the game. You can tell a salesman, "Hey, the guy across the street is charging $100 less on the exact same model," and you will likely get a discount.

Buying a used car, on the other hand, is more like shopping at an antique store. When you find that old Tiffany lamp, there's only one. If you don't buy it, it might be gone tomorrow. "Buying panic" is very likely to take hold of most consumers in this situation. Without question, the buyer has less leverage. It's normally impossible to play one antique dealer off another to get a better price.

That's how things work in the used car market. Sure, you can find similar models with similar odometer readings. But two used cars are always different -- one is more of a cream puff, one has obviously worn brake pedals that hint at aggressive use, one has a cigarette stain in the back seat, and so on. It's very hard to play dealers off each other, because by the time you travel to a competitor, the car you want really could be gone.

So when you shop for a used car, you are surrendering the most powering bargaining tool you have: competition. And nowadays, the Internet has really tipped the scales of comparison shopping towards consumers.

More than 10 years ago, I took a new car off the lot for a solo test drive, drove onto another dealer's lot, and parked next to another car I was considering to show how serious I was about comparison shopping. But driving around like that to multiple dealers would get exhausting very quickly, something economists call "search costs." High search costs prevent consumers from getting the best market price. The idea of haggling with seven different auto salesmen in seven different showrooms probably makes your stomach churn.

Nowadays, thanks to the Internet, you can do the same thing over e-mail, for virtually no search costs. The last time I purchased a car I got price quotes from dealers and e-mailed them to each other.
Experts agree that while Web sites and magazine research can give you a good idea of the price you should pay, a host of local factors mean there's really only one way to make sure you pay a fair price for your car, and that's to get price quotes from multiple dealers. Reed recommends asking for seven price quotes before visiting a dealership. Try doing that when shopping for a used car.

If ever there were a time to put the principles of market forces to work buying a car, it's now. The used car market simply doesn't offer the kinds of downward price pressure that the new car market does, thanks to competition, and our time offers unique leverage to car buyers.

How to buy new
Sadly, getting a price quote is only the beginning of the car buying process. You might not find that much variance in price, once you show the dealer you are a savvy buyer who's done Internet research. Dealers will recognize you and lure with a low price, then hope to cash in on your purchase by larding up your deal with extras and hidden fees.

"If you get seven quotes, you'll likely have five that cluster in the middle, one that's very high, and one that's very low," Reed said. Now you will have a good idea of the real market value of the car you seek.

The low price might seem tempting, but it should raise alarm bells. If you try to purchase from the outlier, you can bet that dealer will try to make up the difference somehow. Dealers often make more money in the meat grinder of the buying process -- at the financing desk, for example -- than they do on the actual purchase. So that's when your antenna should perk up. But even if you go with an average-priced dealer, there are many traps on the way from e-mail quote to your driveway. Here's how to survive the experience and get a good deal:

1.) Purify the negotiation
The most universal tip for saving money buying a car is to show up at the dealership with your own money -- buy the car with cash, or with a pre-arranged loan from your bank. The dealer will hate you, because they make money on those loans, but you don't care. A car purchase is already an incredibly complex transaction, and something you do only every five years or so; don't muck it up with another complex transaction like a loan. Paying "cash" will make your negotiations simple. You only haggle over the price of the car. From the moment you arrive until the moment you sign the contract, make sure all your focus is on the price of the car and not on any side deals, like loan interest rates or extended warranty discounts.

When you settle on a price, make sure it's the "out-the-door" price. Dealers know smart buyers are arriving with Internet printouts that claim to reveal "invoice" prices, and force them to offer rock-bottom sales prices. To counter, they tack on fees for marketing and other intangibles, or they over-charge for license and tags. Some of these fees are legitimate; just make sure you know what they are when you are negotiating and keep the conversation about your out-the-door price.

If you plan on trading in your vehicle, don't bring that up until you've established the price. Remember, you want to keep the conversation simple. If you combine trade-in value, financing, and price all in one conversation, you will give the dealer too many weapons for baiting and switching -- what the dealer giveth in trade-in they'll taketh in interest rate, for example. If you can, sell your trade-in privately. You'll always get a higher price, and Craigslist makes it easy.

This tip leads into another hard-and-fast rule for price negotiating: Never talk about monthly payments. always talk about the total price. Dealers win when you talk about monthly payments – burying hidden costs in those payments is their most common trick. Many consumers who think they're paying $369 a month for four years end up happily leaving the dealership paying $349 for five years, only to have an embarrassing conversation at a cocktail party six months later. This is the chief reason to show up with your own money or loan. When the sales rep says, "What can you afford per month," you say, "What's the total price of the car" and move on.

When price comparing, expand your local area. Reed recommends getting at least one quote from an entirely different metropolitan area -- if you live in DC, get at least one quote from Baltimore, for example. "The price differences can be enormous," he said, and fluctuations have been exaggerated in recent months because of the economic downturn. When a dealer goes bankrupt, for example, a flood of cars can hit the local market and impact prices. Now more than ever, it pays to expand your shopping region.

Finally, if you hear anything you don't like, you can employ the most important bargaining tool you have: walk out. Some people believe that if you haven't walked out of a dealership at least once, you haven't really bargained for your car. Keep in mind that if you're buying a new car, there will always be another one just like it somewhere else. And despite what the salesman says, the price you're getting is never only "good for today."

2. Give yourself time
This seems obvious, but it's not. Dealers brag about how fast they'll get you into a new car. You might be busy running back and forth to soccer practice. But buying a car is the second-biggest financial decision most people make, and it deserves sober reflection. Take at least a full weekend to shop and *not* buy. One helpful trick: Find out if a local dealership is closed on Sundays, or another day of the week, and walk the lot on that day so you can survey cars without being hassled.

3. Avoid extras
This sounds like point No. 1, but it's the most common error car buyers make, so it deserves separate mention. Reed's friend, who saved $12,000 on a Chrysler car, gave part of that savings back by buying a $2,000 extended warranty from the dealer. "The car's power train already had a lifetime warranty," he noted.

It's easy to get sucked into warranties. Sales reps just pack consumer loans with them. You might hear, "Oh, it's only $15 extra a month." Some dealers even hint – or lie – that they are required by banks. They're not, and they can be purchased separately. Extended warranty sales abuse has been so extreme that several states, such as Washington, have passed separate consumer laws that give buyers "regret" rights. Extended warranties bought at time of sale can be voided for seven days after purchase.
Other extras, like undercoating protection, are usually unnecessary and can turn a good deal bad very quickly.

4. Take the cash
Zero-interest loans sound like a deal that's too good to pass up. Often, you should. When offered the choice of rebate or low-interest financing, you should almost always take the cash. For starters, it gets you out of the car dealer's financing office, which helps you avoid the booby traps there. And generally, the math works in favor of applying the rebate to your down payment and using your bank loan instead. Bankrate.com offers a calculator to help you decide.

But generally, take the zero-interest deal only when you are borrowing a lot (more than $20,000) and the rebate is small.

5. It's OK to ask about dealer financing…at the end.
When you get through all the steps of negotiating, and have the final out the door price, it's worth asking the dealer if it can beat the financing deal you already have from your bank. Often, the dealer can offer a better rate. But before you even ask the question, make sure you know exactly what your payments and terms would be with your bank loan. Using that comparison is the best way to make sure you aren't missing some hidden cost that's shoved into your dealer loan

6. Take a friend
When the time comes for doing the deal, another pair of eyes really helps. It's impossible for a mere mortal to follow everything that's going on when you are sitting in those dealership back-rooms surrounded by the sales posse. Generally, at that point, the buyer is worn down and just wants to go home. It's very helpful to bring a dispassionate friend who can ask extra questions on your behalf and act as your own posse.

7.) Price isn't everything.
Finally, you don't always have to go with the absolute lowest price. Many shoppers get hung up on those last few pennies as a point of negotiating pride. That's silly, and can hurt in the long run. I'd happily pay $100 more to buy a car from a dealer I trusted, and who didn't make me miserable during the purchase process. There's a high likelihood that you will end up back at the dealership at some point in the first two years – to get a small repair, or to ask a question. At that point, you'll be glad you purchased from a good dealership.

If you're interested in a deeper look into the shady back-room dealings that happen at auto dealerships, read this spectacular account by Chandler Phillips, a reporter who was hired by Edmunds.com to work at a dealership and write about the experience. The epic take he produced should be required reading for anyone buying their first car.

Meanwhile, for a quick overview of the car buying process, a Youtube video called "How to Buy a Car and Not Get Screwed" is a cult favorite.

How do you save on car buying? Leave your comment below or visit Newsvine and join the Red Tape Raiders.

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Home telephone service is a utility bill you probably don't think much about. And why would you? Prices never change, right?

Wrong.

A study by the Utility Consumers Action Network released this week shows the prices for common services like call waiting and unlisted number requests have skyrocketed. Since 2004, call waiting is up 86 percent, while keeping your number out of the phone book costs 346 percent more, the study found.

Numbers like these keep Bruce Kushnick up at night. Kushnick runs New Networks Institute, which investigates the lingering impact of the breakup of the old AT&T. One impact, he says, is higher bills. As evidence, he points to his Aunt Ethel's basic phone bill service, which cost $7.63 cents in 1980 but $39.36 in 2006. Aunt Ethel has lived in the same New York City apartment the entire time.

Subscribers to the plain old local telephone service have probably noticed similar bill creep, no matter where they live.

Meanwhile, since 1980, a host of new utility-like bills have been added to Americans' monthly budgets -- all which may directly impact the price of your telephone. Among these are Internet access, wireless phone service and pay television. Enter the "bundle." Consumers can buy some combination of all these services (and perhaps all of them) from a single firm. But as many consumers quickly learn, seductive bundle offers often lead to even higher bills. They also tie your fortunes as a consumer to a single company. If that relationship goes sour, you'll put all those services at risk. And you'll probably face a hefty termination fee if you try a hasty breakup.

That said, it's smart to think of all these services as a group because there are ways to save money when you purchase them together. You may ultimately decide a bundle is easiest and cheapest for you. But it's always best to at least price the services separately and see if you can do better.

We've already discussed how to save money on pay TV and cell phone service in earlier pieces, so today we will focus on the other part of that bundle -- phone service and Internet access.

BROADBAND
Many of the money-saving tips I'll offer today require a reliable broadband connection. If you want to watch cable TV programs over the Web, or use an Internet-based telephone, you'll need broadband you can count on.

It's hard to give generic advice on broadband pricing, because even national companies like Cox and Verizon vary their prices by locale. And thanks to bundling, it can be hard to compute the real price of broadband. In one deal I've seen from a cable provider, broadband costs $59 per month -- unless it's purchased with a cable TV package. Then the price drops to $33 per month.

The Pew Internet and American Life Project estimates the average monthly bill for broadband users was $34.50 in 2008. If you're paying more, you should find a better deal. Watch for advertisements from competitors.

Regardless, low-speed DSL is still the price champion in most area codes -- under $20 for most consumers who already have phone lines -- and it provides perfectly adequate bandwidth for most applications. You really can watch episodes of "The Daily Show" on Hulu.com over a DSL connection. If you're looking for a way to cut monthly expenses, downshifting to DSL is a fine way to do that.

In fact, while broadband providers often throw out through-put speeds the way teen-age boys brag about car engine size, many consumers end up unimpressed when they upgrade to high bandwidth. Speed is good, of course. But you just don't need 4 megabits per second to follow someone on Twitter, read your e-mail or update your Facebook status. And many consumers have PCs or modems that can't really handle that faster speed anyway.

You also might not be getting what you pay for. Anyone who pays for Cadillac-level broadband should regularly check their real-life broadband speed. Speakeasy.net offers my favorite free test. One of the most nefarious hidden fees is paying for broadband you don't really get.

On the other side of the spectrum, bandwidth hogs who stream HD movies or play interactive videos should know that all Internet service providers are testing tolls that will penalize excessive users. If that's you, be sure to read the fine print on overage charges, and be sure to watch for new policies in the coming months that may increase your bill.

The arrival of Verizon FiOS in some U.S. cities is a great development for consumers, because it has forced cable Internet providers to either lower prices or raise speeds, or both. But beware trial offers. Broadband firms love to hook customers with low three-month offers that rise when you stop paying attention. So don't ignore those monthly bills.

Also, don't ignore smaller, local Internet service providers, which can sometimes offer surprisingly competitive deals.

Finally, one drastic way to cut back during the economic downturn is to dial your Web service all the way back to dial-up. Today, according to Pew, only 9 percent of Web users get their Internet over an old-fashioned modem. But dial-up providers seem to think they have an opening with the sour economy. Earthlink, for example, has just cut its price to $7.95 per month and is marketing the service as a budget-saver.

Dial-up service is inadequate for many Web services, and even many Web sites that are optimized for broadband. But it's certainly better than having no Internet connection at all.

LAND LINE
There's a catch with dial-up and DSL, however. You need a phone line. There's really no way to get Internet access for $7.95 per month -- you have to pay $7.95 plus $25 or so for a home phone line. Ditto for DSL in most cases (so-called naked DSL, which doesn't require a telephone subscription, is still not widely available). The true cost of DSL is more like $45 per month.

This is why it's important to consider phone line, Internet and other services together. You might save money by backing down to dial-up Internet service, but perhaps you could save more by ditching your phone line, getting Internet through a cable provider and signing up for an Internet telephony service.
Plain old telephone service -- POTS -- is clearly in the autumn of its life on the American scene. The National Center for Health Statistics recently reported that the number of wireless-only adults exploded last year, jumping from 13.6 percent in 2007 of adults to 16.1 percent in the first half of 2008. In some parts of the country, one in five adults don't have a landline.

And why not? As Aunt Ethel found out, land line service is expensive. So if you haven't cut the phone cord yet, there are a few ways to do that and save a lot.

1. Cancel your land line phone and just use your wireless, taking advantage of free long-distance calling plans. If you need to call internationally, try an online service like Skype or an international mobile-phone/Internet telephone bridge service like CellularLD.

2.Keep the home phone line, but cancel long-distance service. This will lower your bill by 25-50 percent, because you'll save on phone costs and some federal taxes, such as the Universal Service Fund tax. You'll still need a calling card or cell phone to make long distance calls. If you go this route, make sure you actually formally disable your long-distance service. Otherwise you'll be subject to a monthly fee, like Verizon's "short fall" fee, which is assessed to callers who don't make any long distance calls. If you do disable your long distance calling, you may have to pay a $5 disconnect fee, but it's worth the savings you'll see.

3. Get rid of your land line and sign up with an Internet telephone product like Vonage or Skype. Be aware though that these products do charge monthly fees and may not be as inexpensive as they initially appear. Also note that not all IP phones handle 911 calls correctly, so be sure to discuss potential emergency calls when you sign up. The FCC has an information page here. Because of these 911 issues, Internet phones might not be for everyone. A cheap, local-call-only phone combined with an Internet phone might be a better compromise.

One VOIP product that's gotten a lot of attention lately -- thanks to a blitz of late-night commercials -- is Magic Jack, a small USB device that lets consumers plug telephones directly into their PCs. While the quality of the phone calls has received some critical acclaim, there are also numerous customer service complaints online about the firm, including some from unsatisfied customers who say they have difficulty obtaining refunds.

How do you save on phone and Internet services? Leave your comment below or visit Newsvine and join the Red Tape Raiders.

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If you're struggling to make ends meet, one obvious place to cut costs is to stop paying for something that gets you nothing. I'll bet you've looked more than once at an insurance bill and asked yourself the simple question: "Why?"

The average American spends more than $2,000 each year on auto, life and homeowners' insurance. And what do you get for that money? Not very much. For example, only about one in 15 drivers makes an auto insurance claim every year.

On the other hand, you probably know better than to question the need for insurance. Even if you've never had an accident, you know your time will likely come. And when it does, it'll be costly. The average auto insurance claim payment is nearly $4,000. Plus, auto insurance is required by law, so you don't really have a choice.

It is not required that you overpay, however, and many people do just that. Here are a few tips you can use to pare down your insurance bills without putting yourself at unnecessary risk. I'll focus on auto insurance, but mix in a few tips about life and homeowners policies as well. And many of the principles apply to any kind of insurance you buy.

It helps to think of insurance as a concept as well as a product. Insurance was designed centuries ago to ease catastrophic losses by individuals by spreading risk over wide pools of contributors. One oft-told story has it that Chinese traders invented insurance by spreading their goods among each others' trading ships, so that no merchant would be wiped out if a single ship was lost at sea.

Notice I used the word "catastrophic." Insurance was never designed to make your life easy, and it's not really designed to make you whole after an accident either. It's designed to prevent you from being wiped out. If you get in a small fender-bender that requires some paint touch-up, you should expect to pay for those losses yourself. Save the insurance for the big event when you really need help.

In practical terms, this means most people are better off keeping deductibles on their policies high. The two most common optional coverages on auto policies are collision and comprehensive – collision covers the cost of repairing your car after accidents that aren't covered by someone else's policy, and comprehensive covers everything else (mainly fire and theft). Since you shouldn't make a claim for a $565 repair, you shouldn't pay for that level of coverage either. Raising the deductibles on your auto insurance policy is probably the single quickest way to save money. How much? Raising the deductible from $200 to $1,000 on comprehensive insurance will save an average of 40 percent or about $100 per year.

As a matter of sound financial planning, you should "self-insure" against the cost of these smaller incidents. That means when you raise your deductible to $1,000, you should simultaneously put $1,000 in an interest-bearing account that's earmarked specifically for small auto-related troubles. This way, when a theft or fire occurs, you can cover the expense relatively painlessly. In the meantime, you have the extra $100 each year – not your insurance company -- and you earn the interest.

There are many consumers who should consider dropping collision and comprehensive coverage altogether. Remember, these insurances are designed to protect you from a catastrophe. If your beloved clunker is only worth $1,800 and has a real replacement value of $1,200, it doesn't make sense to pay for comprehensive coverage with a $1,000 deductible. Many consumers fail to realistically assess the replacement value of their car and the real value of their comprehensive and collision coverage. In 2006, the last year for which figures are available, the National Association of Insurance Commissioners said 77 percent of drivers bought comprehensive coverage and 72 percent bought collision. I know there are more clunkers out there that that. This is why it's so important to reassess your insurance policy every year.

When should you stop paying for collision and comprehensive? It's a personal choice, but here are some rules of thumb: As soon as you get to the point where you wouldn't spend $2,000 to fix your car, drop the extra coverage. Or, if you'd like a more complex formula that's often used, drop coverage when your annual premium multiplied by 5 exceeds the value of your car. If you already have that $1,000 set aside as your own "self-insurance" policy, that money can ease the blow if your car is stolen.

There's no way to skimp on the third main element of most drivers' insurance policies: liability. In fact, many insurance experts think consumers generally buy too little liability coverage. Minimum coverages are specified by each state's insurance regulators. Here's one list of state-by-state requirements.

You will often see liability insurance expressed as a series of three numbers, like this: 25/50/10. That means your state requires $25,000 in coverage for a single person's injury in an accident, $50,000 in coverage for all people who might be hurt, and $10,000 coverage for any property damage. It's important to note that who gets paid by your insurance company after an accident varies based on whether your state is a "tort" state or a "no-fault" state. In tort states, the responsible party's insurance firm pays. In no-fault states, your insurance will pay you no matter whose fault the accident is. So if you skimp on coverage, you might actually be skimping on your own payouts. Twelve states currently have no-fault rules, according to the Insurance Information Institute (click for a list).

How much coverage should you have? Consumer Reports last year recommended 100/300/100 for an average middle-class worker. To be more specific, your coverage should grow with your income and assets. Think like a lawyer for someone you've hit in a car accident. If you have assets in excess of $300,000, someone might sue you for their value. So you should have at least enough liability coverage to protect your assets in case of an accident.

One other thing to look for: Many insurance companies load up policies with unnecessary extras like roadside assistance or rental car reimbursement. While roadside plans from insurers can be a good deal, make sure you aren't covered twice (perhaps by AAA, or your cell phone or your car manufacturer).
Rental car reimbursement can be handy, but it doesn't fit into the category of preventing catastrophe. In this economy, it's probably a luxury you can live without.

Even if you've done all these things to keep your insurance premiums down, you should take the time to get price quotes from competitors once each year. Auto insurers have a secret sauce they use to price policies. It includes arcane and unexpected items like your credit score. The only way to find out if you are paying a fair price is to see what the competition charges. Make sure you compare apples to apples when pricing polices -- same collision deductible, same liability and so on. Some insurers make that difficult, but it's worth the effort.

Other insurance tips
Finally, if you want to switch providers, do a little background check before you do. About half of U.S. states maintain extensive databases of complaints against insurers. The numbers are boiled down to a single rating called a "complaint ratio," which is essentially the number of complaints per customer each company gets. If you are thinking of signing up with a new company, make sure you aren't jumping to a leaky ship by first checking the complaint ratio database on your state's regulators Web site. How do you find that?

Here's a link to a state-by-state listing of insurance commissioners

Homeowners
Once consumers get into a home, they often allow their bank to pay their homeowners' insurance automatically through escrow payments. Then they forget all about it. Big mistake. Homeowners premiums can vary widely and also can be impacted by seeming unrelated items, such as a change in credit score. It's important to get competitive bids for your home insurance at least once every few years. Also, it's really important to avoid filing homeowners claims, and there's evidence that you shouldn't even place a call to your insurer asking about whether or not you should file a claim. Insurers share information on claims through a big database called CLUE -- Comprehensive Loss Underwriting Exchange. Sometimes, insurers make entries simply based on consumer inquiries. Avoid getting into this database at all costs. Handle small home accidents yourself.

And, if you've done anything to make your house safer – such as adding an alarm or helping to pay for a new fire station nearby -- make sure your insurer knows about it.

Life
Life insurance comes in so many flavors that I can't address then all in this column. My colleague Laura Coffey covered most of the basic ways you can save on life insurance in a recent column.

A few points should be stressed. Just like any other kind of insurance, life insurance should be there to prevent a disaster, such as premature death of a family's wage earner. It should not be confused with an investment vehicle. Life insurance policies that are bound up in retirement plans are generally a bad deal, and they are almost always confusing. Keep it simple. Buy what you need to take care of your loved ones if you die. How much do you need? Here's one calculator

The most common mistake people make is ignoring other sources of income available to the surviving spouse, such as Social Security benefits, when making the calculation. You'll need less insurance as life goes by and the kids finish college.

The best way to save money is to be healthy. Life insurers punish smokers with higher premiums. Ditto for those with high blood pressure or heart-related health issues.

The good news is that life insurance rates, overall, are plummeting. Premiums dropped 50 percent from 1994-2007 according to the Insurance Information Institute, thanks to better risk-assessment formulas and, naturally, competition.

How do you save money on insurance? Place your comment below or visit Newsvine and join the Red Tape Raiders.

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Cheryl Clymer knew her luck was about to run out. For several weeks she'd been walking a tight rope on her checking account balance, paying bills at the very last moment and depositing checks as soon as possible. But last week, with the power company threatening to turn off her lights, she had to pay her $260 electric bill even though she knew that her car payment -- scheduled to be automatically withdrawn that same day -- would push her account into the red. There was a slim chance, she figured, that one of the payments wouldn't be debited right away, and the paycheck coming in two days would cover her, but she fully expected she would be hit with a $35 overdraft fee.

But when she checked on her account a few days later, her heart sank. She'd been hit with $185 in fees -- five separate $37 charges.

Clymer was victimized by an extreme form of what's called "high-low" check processing, a term that's becoming better known as more U.S. consumers find themselves living close to that checking account edge.

Clymer knows her neighbors are having similar struggles – the unemployment rate is more than 10 percent in her hometown of Toledo, Ohio. While she looked over her bank statement in disbelief, she couldn't help but think about the billions of dollars in taxpayer money being spent to prop up banks right now.

"Don't they know I have buy gas to go work and food to eat?" she said. "Don't they have any idea what they are doing when people are on the verge of losing homes and getting utilities shut off (and) they gouge their customers like this?"

Here's what Clymer said happened to her account. The weekend before the car payment was due, she had made four small debit card withdrawals over a three-day weekend. But they were not deducted immediately. In fact, the bank "saved" these charges, and only debited her account after she paid the power bill. That meant all those charges hit after her account was in the red, and each incurred a $37 charge.

The way Clymer sees it, her account was in the black when those weekend withdrawals occurred, so she shouldn't have to pay overdraft fees on them.

"I had the money on the day my four debits were done. ... Why am I penalized for five transactions instead of the one transaction that I realized was not going to clear?" she said. "Why am I the victim of their whims of their timing schedule? I am so angry that I am shaking."

High-low processing has been a sore point with consumers for years. If several transactions hit on the same day, banks will debit the largest one first, then proceed downward. This creates situations like the one that Clymers was caught up in: If her small transactions were processed first, only one would have occurred while her account was in the red, triggering one overdraft fee. By processing the largest first, the bank was able to charge five separate fees.

An average of $368 every year
Most banks offer "free" checking accounts, but as Clymer discovered, these free accounts can be expensive. Last year banks collected a stunning $37 billion in overdraft fees, according to a study by bank consulting firm Bretton-Woods Inc. That works out to $368 per account holder every year.

Bankrate.com has conducted an annual survey of bank overdraft fees for nearly 20 years. Only twice during the span have overdraft fees not risen; it goes without saying that they've never shrunk. Fee income is an essential part of banks' revenue now, and at some institutions it has replaced interest margin earnings as the main source of income. In fact, fee income doubled from 2004 to 2008, and the number of individual overdraft items more than doubled -- from 619 million to 1.3 billion -- over the four-year span.

Consumers who want to save money on banking need to think like a financial institution. You have two sources of trouble: fees and opportunity costs. Let's start with fees.

Cut out the fees
Given the wide availability of free checking accounts, the majority of bank fees that consumers pay are punitive. The Bretten-Woods survey indicates about 80 percent of all bank fees are overdraft fees. That makes overdraft fees avoidable in most cases, which is how the banking industry defends them.

"Only (account holders) know what checks they have written, automatic payments they have authorized and debit card transactions they have approved. Simply put, consumers are in control of their finances and can avoid overdraft fees," Nessa Feddis, counsel for the American Bankers Association, said at a congressional hearing on bank fees last year.

But banks have designed their fee structures to force consumers into a game of account balance roulette. Remember, punitive fees are critical to banks' bottom line now – their very survival depends on winning this game. So bankers spend endless hours trying to concoct new rules and booby traps to trip consumers. And when they do slip up, the banks exact a pound of flesh.

It's reasonable for banks to charge fees for overdrafts. But tales like Clymer's are the rule rather than the exception, meaning the punishment often doesn't fit the crime. The fact that banks now make their living by punishing their customers should tell you all you need to know about this industry.

Here's how to avoid their traps.

For years, consumer advocates have advised account holders that the best way to avoid "courtesy" overdraft fees is by linking savings or credit cards with their checking accounts. If an overdraft occurs, consumers with linked accounts will essentially be paying the fee with their own money.

While linked accounts are still a good option, banks have caught on to the fact that consumers are wising up and are reacting accordingly. Citibank, for example, last year initiated a $10 fee for each linked transfer – a steep charge for merely transferring consumers' money from one account to another.

It's important to know all the various ways that overdrafts can occur, particularly if you are new to living on the edge of a bank account. Many consumers don't realize that they can trigger an overdraft by making a debit card purchase or withdrawing money from an ATM. Once upon a time, banks would reject transactions or withdrawals that exceeded balances, but now most banks will approve negative balance transactions and charge fees. To avoid them, tell your bank that you decline "courtesy" overdraft protection.

Of course, that's no help if you're in Clymer's situation. Consumers who require an overdraft to get through the month should look hard for other alternatives. Payday loans and credit card cash advances are a terrible option for paying monthly bills, but in Clymer's case they would have been cheaper. If you consider that an overdraft charge is really a fee for a short-term loan, the effective interest rate can be nearly 1,000 percent.

Consumers also should be aware that the bank is likely to orchestrate the order of transactions in its favor. Banks will always cash the largest check or debit the largest transaction first, enabling them to layer on the maximum number of overdraft fees.

For this reason, consumers should avoid using a debit card for purchases. A credit card is a better choice for those close to the edge. Paying in cash is still best, but it's a good idea to minimize cash withdrawals by planning ahead.

It's also important to recognize that your banks' fee structure may be radically changed if it's been absorbed by another bank recently as part of the massive industry consolidation under way. As surviving banks swallow failing ones, watch the mail carefully for notifications of changes to fee policies. You can bet the news won't be good. Larger banks almost always charge higher fees than smaller banks.

A recent study by Moebs $ervices found that banks with more than $20 billion in assets charged an average of $33 per overdraft, while smaller banks with under $100 million in assets charged an average of $24.

The bleaker things get for banks, the more aggressive you should expect them to be in assessing fees. Anecdotally, readers report that fee waivers are much harder to obtain now. Still, if you are hit with cascading fees, visit your local branch and plead for leniency. Even better, plan ahead for such an occurrence. Make sure to visit your local bank branch from time to time and say a friendly hello to the bank manager or receptionist. It's always easier to ask for help from someone who knows you.

A proposal to reign in overdraft fees was considered by banking regulators when they issued new credit card rules earlier this year, but it was set aside. Legislation working its way through Congress right now, known as the Credit Cardholders Bill of Rights, includes provisions that would limit some of these overdraft practices. Call your congressional representative and voice your support for the law if you'd like to see some change.

Opportunity cost
Many consumers don't think much about opportunity cost, which in this case might be defined as what you miss out on while you're parking your money in the equivalent of a mattress every month. Interest rates at most banks now must be measured with an electron microscope. Returns of less than 0.1 percent annually are typical. Obviously, that means interest-bearing checking accounts aren't worth the trouble, particularly if they come with a high minimum balance. Those accounts force you to fork over $1,000 to $3,000 or more for the bank to use. You can't touch the money and, once again, if you slip up even for one day, the penalty is severe. Using such an account places you at risk for a $12 monthly service charge when some rainy day arrives. Dump that risk and sign up for the cheapest no-interest, lowest minimum balance account your bank offers.

You'll probably have to badger a teller to get instructions on how to sign up for the no-frills package. But all banks have them.

After you sign up, pay close attention. Banks have been known to end such basic options and "upgrade" accounts without much warning. Watch for that.

Your 'staging' account
Many banks offer fee-free checking to anyone who signs up for direct deposit. That's often the best way to get free checking. But this account should be used only for temporarily parking your salary and to pay the big monthly bills, like your mortgage or car payments. I call this the "staging" account.

Consumers who use their checking account for everything inevitably run into trouble. It's too hard for most people to keep a firm grasp on their balance while buying $4.50 lattes every day, making electronic payments, and depositing small checks. Bankers call this "velocity," and most people have too much of it. That's a recipe for disaster, and it almost certainly costs you interest income.

If you really must use a debit card for purchases, set up a second account – or an "allowance" account -- and transfer money into that each month. Then use a debit card to draw money on that. This keeps your main life balance sheet clean and simple. That's the best way to keep track of how you're doing every month, and how at risk you are for an overdraft charge. No consumers' primary checking account should be littered with 30, 40 or 50 transactions every month.

Next, make sure your leftover money is working for you. There are many ways to accomplish this. If you haven't yet considered an Internet-based savings account like ING Direct or HSBC Direct, you're really missing the boat. Rates on these accounts have shrunk too, in concert with Federal Reserve rate cuts, but they're still above 2 percent. They are easily linked to your primary, or staging account. And they are still FDIC insured. Two percent guaranteed should sound pretty appetizing when you think about everything else going on in our economy. If you keep an average balance of $5,000 in an interest-deprived checking account, you're throwing away more than $100 a year by not opening one of these accounts. And when the coming wave of inflation arrives, you'll be in position to earn much more.

Much the same can be accomplished by linking your primary checking account to a money market account at another financial institution or your brokerage, but keep an eye on those interest rates. Many money market interest rates have shrunk to anemic levels too.

Have you been hit by huge bank fees? Or do you have an idea for saving money on bank accounts? Leave your comment below or visit Newsvine and join the Red Tape Raiders.

As you scan your monthly bills -- rent, car loan, home phone -- I'll bet one sticks out like a sore thumb: pay TV. The average American now spends $1,000 a year on television. And suddenly, that's a luxury many people just can't afford.

But there's good news for long-suffering television viewers. The era of cable/satellite domination was already dying a natural death, with real competition like Verizon's FIOS service finally reaching many cities in America. But now the Internet appears ready to drive a stake through the heart of the cable/satellite duopoly. Thousands of TV shows are available for free on the Web, and the technology needed to watch is getting cheaper and simpler all the time.

These developments mean you don't have to pay the average $84.59 monthly cable bill anymore. Even if you elect to keep buying a television service, you can pay less. Finally, consumers have real bargaining power. So let's deal with both options: lowering your monthly bill or cutting the cable completely.

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You may have heard that some of your favorite TV shows are available on the Web but haven't felt up to the hassle of hooking your laptop up to your flat-screen. Later I'll try to persuade you it's not so bad. But even if you are committed to paying for your television, I want you to know how these new trends can help you.

The cable television industry is running scared. Time Warner, for example, lost 119,000 subscribers in its fourth quarter. You'd be scared, too, if you ran a business and someone suddenly started giving away the product you sell.

The mistake nearly all paying cable and satellite customers make is not re-evaluating their bills frequently enough. We all know this story: A year ago you signed up for a $29-a-month service, but somehow your bill is now $105. Those HBO channels that were free suddenly cost $15 each month. The service itself is now $65 a month. And there are other fees that you don't even understand.

How did this happen? The $29 price is a teaser rate, of course, designed to suck you in and then suck you dry. And it works. Many people are busy and forgetful, and they just keep paying those high bills.
Here's how to lower your bill. Pay close attention to these teaser advertisements. I know they always say, "For new customers only," but that shouldn't stop you. At least once each year, you should call up your provider and ask for their advertised teaser rate. You'll be rejected on your first attempt, but keep trying. Eventually, you'll succeed, if you take advantage of your newfound leverage.

That means you must be ready to threaten to cancel your service ... and be willing to follow through. Front-line operators at many pay TV companies don't have the authority to give you a discount on your current rate. But if you are transferred to the "cancellation department," also often known as the "customer retention department," you will be playing a new ballgame. These people have all sorts of magic powers to keep you as a customer. You may not get the rock-bottom teaser price in the end, but you'll almost certainly end up with a better price than you are paying. Sure, this might take an hour of annoying phone calls. But remember, saving just $20 each month means saving $240 a year. Who among us would turn our nose up at a $240-an-hour job right now?

For a great example of what could be called the "just ask" strategy in action, visit Jeffrey Strain's Personal Finance Advice blog and read how he got his mom's cable bill cut from $79 to $39 per month with one phone call.

The key to success is taking advantage of your real bargaining power. Don't make the "just ask" call unless you have a competitor's offer in your hand, and you willing to follow through on the threat if you have to. So if you plan to call Comcast, have a DirecTV or FIOS ad in your hand and know that you can make that switch.

While we're on the subject, , here are a few other things to watch out for on that monthly bill: with the advent of HDTV, a whole new set of fees are in play. Many consumers are paying an extra monthly fee for HD service and rental of set-top boxes. Only pay for boxes you need! If your TV is already HD-ready, you don't need a digital converter box, for example. Don't expect the cable provider to tell you that. If you sign up for service with the promise of free installation, watch your bill for several months to make sure installation charges don't show up. And if you expect a refund or rebate as part of a sign-up package, make sure you understand the terms. Many rebates contain cleverly disguised early cancellation fees: you only receive them as credits if you continue to pay for the service.

Finally, cable customers shouldn't forget that they can file complaints about service and billing problems with their local government's "cable franchising authority," a surprisingly effective way to get satisfaction. The phone number is on your bill. Satellite customers aren't so lucky and can only complain to the Federal Communications Commission.

TV for FREE
In the past, many consumers who made these "just ask" phone calls were making idle threats because they had only one pay TV option. For example, about 30 percent of the U.S. population lives in multi-unit dwellings like apartment buildings, where it's often impossible to sign up for satellite TV, according the U.S. Public Interest Research Group.

But that is changing, and changing fast. Even if you are committed to pay TV for now, you should read on. Understanding the free TV phenomenon will give you much more leverage the next time you call your provider and ask for a better price.

A host of new services are racing to make Web TV easier to use. Some TV networks, like NBC, Fox, and Comedy Central, have taken downright aggressive steps. Hulu.com users are now treated to free, instant viewing of such shows as "House," "The Office," "Heroes," "The Daily Show" and hundreds more popular shows.

Hulu – owed by Fox and NBC -- is just one option, however. (msnbc.com is a joint venture of NBC Universal and Microsoft)

Subscribers to the popular movie rental firm Netflix can now view thousands of TV shows on their computers instantly. The list of networks is impressive, including ABC, NBC, CBS, Fox, The Discovery Channel, and many more.

You might recall that Web TV passed an important milestone last fall, when more consumers watched Tina Fey's impression of Sarah Palin on "Saturday Night Live" online than on TV. Still, the number of people dropping their pay TV service for Web TV is tiny.

There are a long list of caveats about free Web TV: No one wants to watch TV on a computer; it's not as easy to use as a TV; it's hard to find programming; the shows are only available "after" the initial viewing on "real" TV; sports fans have severely limited options; the quality isn't as good; it's really difficult to make Web TV work on multiple TVs around the house; and the kicker: "I don't want to trade in my remote control for a keyboard!"

All these things are true, but are becoming less true over time. Netflix, for example, now sells a $100 set-top box named Roku, which makes its service work just like traditional television, remote control included.
What may be the best recent development is also free: the CancelCable.com Web site, which has a fantastic TV Guide-like service called "Showfinder."

The site makes it easy to find your favorite shows and Web locations (many are available on multiple services). You'll be stunned at the variety of available programming.

The site also has a clever calculator to show you how much you'll save if you stop paying for TV, including a calculation of interest earned on money saved. For example, a consumer who drops a $110-a-month cable bill and instead saves the money while earning a 3 percent return will have built up a kitty of $7,111 in 5 years.

Yes, you can get live TV for free
The main drawback to Web TV is the delay. Understandably, many fans don't want to wait a day to see their favorite programs. But there is another free solution.

Despite all the chaos surrounding the switchover from analog TV to over-the-air digital TV, it's really a boon for consumers. Here's one secret about over the air digital TV that you may not have heard: The picture is amazing. In fact it's so good that many aficionados prefer it to cable or satellite HDTV. Why? There's more bandwidth available to TV broadcasters over the airwaves than to cable or satellite providers trying to squeeze hundreds of channels down their pipes. That means pay HDTV signals are compressed. Many viewers probably won't notice the difference, but even if you are paying for cable (and pay extra for HDTV), you should occasionally switch to free HDTV to get a better picture.

Getting over-the-air HDTV is easy. For about 90 percent of U.S. consumers who own an HD-ready TV, and old-fashioned UHF antenna will provide great reception. If you've never tried it, you should.

Now, combine the free, first-run programming you can get with an antenna with the free programming you can get on the Web and you may very well conclude that you'll lose very little by dropping that $1,000-a-year pay TV luxury. And even if you aren't ready to deal with the hassle of experimentation, knowledge of the alternatives can help you bargain with your current provider. You'll be able to make a compelling argument why their service is only worth $400 or $500 each year to you now. And if you are successful, that's the kind of savings most consumers could really use right now.

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Maybe two years ago you could let that $10 late fee slide or forget to question that $29 overdraft fee. But the world has changed. Now, everyone is taking a much closer look at their finances and their monthly bills. We're here to help.

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Today, we begin an in-depth series exposing hidden "gotchas" in your financial life. The "How to Save Money On…" series will offer detailed steps and suggestions to avoid booby traps and preserve your hard-earned cash. We begin with one of America's main financial menaces: Credit cards.

Americans hold just shy of $1 trillion in revolving debt on their credit cards now, a steep jump from 2005, when revolving debt was $824 billion. The Federal Reserve shows the level of credit card debt has remained mainly flat since the middle of 2008 though, indicating that as the screws started to tighten on the economy in 2006 and 2007 many Americans turned to credit cards to get through the tough times. That spigot is now being slowly turned off, as banks tighten lending standards and lower credit limits. At the same time, interest rates for many cardholders are skyrocketing, so the squeeze is coming from all directions.

That's why it's more important than ever to use good habits around this bad debt.

I know half of you pay your credit card bills in full each month and think you have nothing to learn from a story about saving money on credit cards. I wish that were true. But card-issuing banks are continually using new tricks to force consumers into occasional slip-ups. Some of these tricks will be barred by new bank regulations, but not until July 1, 2010, so you need to know about them now.

Those who don't pay your balances in full each month are paying interest charges. Some are "serial revolvers," who always carry a balance on their cards; others are "occasional revolvers," who borrow through credit cards once in a while. I call this group "holiday credit card users," because they only run up big balances once a year, perhaps around holiday gift-giving time.

Either way, both groups can benefit from the three tips below. And even those with their credit card house in order should read on because you're not immune from late fees. The third tip will help you avoid those.

1. Keep a "clean card"
There's a point when a credit card user flips from a borrower to a revolver: When you start focusing more on your monthly payments than your total debt. No matter how large your debt, if you keep a grasp of the total and keep on top of your plan for paying that off, you are building toward something. If you focus on your monthly payment, you are in survival mode. The "I don't care, I owe so much anyway" mode isn't far behind. You must avoid this slippery slope.

The clean card strategy is one way. It’s based on this simple premise: You should never pay interest charges on everyday purchases. Instead, always have at least two credit cards in your wallet -- think of one as your everyday "clean card," and one as a line of credit.

Why? Let's say you generally pay your bill every month, but this year you spent $3,000 on travel and gifts for Christmas. Then, when your bill came due Jan. 22, you paid the usual $1,000 and figured you'd pay the rest over the next few months.

At this point, most consumers just keep right on spending with that debt-laden credit card, buying lunch and train tickets as usual, racking up their usual $1,000 in monthly expenses. That's exactly what credit card issuers want you to do, but it's a big mistake.

Consumers who pay their bill in full and on time every month enjoy what's called a "grace period." They never pay interest, and have about 30 days grace before charges kick in. But consumers who fail to pay on time fall from grace. From that point onward, they pay interest on every single purchase they make. That stinks, and it's a very bad way to use credit cards. Buy lunch for $5? You're paying interest on that money before you eat the first French fry.

Back to the example above to see what that means in real dollars. Let's say you typically spent $1,000 a month and paid in full -- until the holiday spending spree. To keep the math simple, let's use a 30 percent interest rate. That $1,000 in everyday spending, borrowed for an extra 30 days during the month, will cost you $25 each month. If you take four months to pay off those holiday charges, it'll cost you $100. Take all year to catch up and it costs $300. The larger the debt, the larger the grace period "penalty." If you carry a $3,000 balance -- perhaps from a misguided quest to accumulate miles or points -- you could be spending $1,000 per year in unnecessary interest charges.

Instead, use the "clean card" strategy. Always have one credit card in your wallet that you pay in full each month. That way, you'll always have "grace." In the example above, you'd stop using that primary credit card the day you couldn't pay the bill in full any more. You'd switch to the clean card and enjoy interest-free French fries.

Obviously, at some point during the catch-up period, another unexpected cost may arise, such as an expensive auto repair. Keep that off your "clean card," so it stays clean. Instead, use the second "line of credit" card. If you've planned ahead, this card also has the lowest interest rate of any in your wallet. You might even call and negotiate a lower rate, as one Red Tape reader recently did ("Want a better rate? Just ask") – though as we've mentioned, those are getting hard to come by.

The main idea of the clean card strategy is to pay for regular expenses like restaurants and gas as you go. But the benefits go beyond saving money on interest. You will gain a firm grasp of your total debt. Even if the news is dismal, it's always better to know what you owe, and that number will stare up at you until you pay it off. If that figure is split between 15, 20, or 30 small purchases on several cards, it severely confuses matters. I think it's the chief reason most credit card users lose track of what they owe, and how long it will take to repay their debts.

For an accurate accounting, use a repayment calculator, like this one, to determine how long it will take to repay your credit card debt.

Consumers may see similarities between the clean card plan and other advice you'll see about using a debit card for purchases to avoid running up credit card bills. That can be effective for consumers who just can't control their credit card spending, but using debit cards for everyday purchases is asking for trouble. It's far too easy to lose track of your checking account balance and run the risk of pricey overdraft fees. (I've covered the debit vs. credit debate before).

2. When you pay (and buy) matters
Most consumers who owe money on their credit cards wait for their monthly statements to make payments. But that's unnecessary. Credit card companies add interest to your balance every day and compound it. So on Day 2 of the month you are paying interest on your Day 1 balance, plus the interest charged on Day 1.
Paying early is a great way to save money. Here's one example: A full month's interest on $3,000 at 29 percent is $74. Make the payment two weeks early and you'll only owe $33.37.

A more realistic suggestion is to send in partial payments during the month -- perhaps half the money on the 15th, and then the rest on the 30th. Using the example above, you'd owe $53.

For a more detailed look at how much early payment can save you, look at the No Credit Needed blog, which contains a handy downloadable spreadsheet that mimics credit card average daily balance calculations and contains settings for interest rate, beginning balance, etc. Try out various repayment scenarios yourself.

One thing you'll find is that when you make purchases also matters. Purchases made late in the billing cycle cost less than those made early in the billing cycle.

Here's an example: two consumers with a $2,000 balance and a 29 percent interest rate make a $3,000 purchase during the month. One buys on the 5th, the other on the 27th. The first consumer pays $113.62 in interest; the second about half that: $61.18.

This is probably obvious on some level: You pay less interest if you borrow money for a shorter time. But because we've been trained to think in terms of monthly credit card cycles even though banks charge us every day, they have an advantage. Understanding how banks calculate credit card interest can help you save a lot. So, if you can, buy that new refrigerator near the end of the month and pay your bill early in the month.

3. Auto-pay
Even credit card users who pay their bill in full every month or rarely charge more than a few hundred dollars can benefit from automatic payments through online banking. Let's face it, none of us are perfect. We all get busy, go on vacation or occasionally lose a piece of mail. The day will come when you forget to mail the credit card check on time. And when it does, you'll be slapped with interest charges and a late fee.

While you are probably very concerned about the interest charges, it's really the late fee you should worry about.

A frugal card user with a $400 balance and a 15 percent rate would only owe $2.79 after a month. But the late fee could be $30, $35 or even $39.

There was a time when credit card issuers would offer one-time waivers of late fees to good customers. Some still do, but facing sinking revenue, many have eliminated such largesse. That means avoiding late fees should be a top priority.

Doing so is easy. You know every month you'll have to send a check to your credit card company. In fact, you probably have a rough idea of how much that is -- say, you always spend at least $300 each month. Set up your online banking account to automatically send $300 to your bank every month, at least five days before the due date. Why five days? Because many banks occasionally shrink their repayment timeframes by a day here or there, triggering late payments. You want to stay ahead of that.

Each month, you can go in and manually adjust the amount so it reflects your bill. But that one month you forget -- you'll be covered. You'll have to pay interest on the unpaid balance, but that will be small potatoes compared to the late fee you've avoided. And, if you send the full payment as soon as you realize your error (as opposed to waiting until the next bill arrives) you'll save even more money.

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