Hidden Fees Are Costing Americans Billions: What You Can Do About It
Companies are getting rich off junk fees and consumers are paying the price.
As the term suggests, these junk fees are hidden, surprise charges that can get snuck onto consumer bills. Not only are they frustrating to deal with, but they can add up over time and impact your finances. In some cases, they’re even predatory or fraudulent.
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You could be paying hundreds of dollars in fees each year and not even realize it. Per a White House study, American consumers have spent nearly $65 billion a year on these fees, and President Biden wants to do something about it. The Federal Trade Commission has proposed a new rule banning businesses from charging “hidden or misleading fees,” requiring them to show the full price upfront. The Consumer Financial Protection Bureau is also working to require large financial institutions to disclose all banking fees upfront.
These policies have yet to pass, but taking notice of them now can help you keep more of your hard-earned dollars in your wallet. Here’s our guide to understanding these hidden fees — and what you can do about it.
The most common hidden fees
Over 85% of Americans have encountered a hidden fee over the past two years, according to a survey by Consumer Reports. You’ll typically find junk fees attached to a service in industries like entertainment, hospitality, banking, and technology.
Here are some of the most common junk fees to watch out for:
Banking fees
The most common bank junk fee is a maintenance fee to keep your account open. You may also face fees for withdrawing money from an ATM or putting your account into overdraft. These fees range depending on the bank and the type of transaction.
You may also face fees when swiping your credit card. Many card issuers will charge a myriad of fees if you don’t pay your credit card bill on time. In fact, Americans paid $12 billion in credit card late payment fees in 2020, according to the Consumer Finacnial Protection Bureau. They also paid $15.5 billion in fees in 2019 for bank overdrafts and nonsufficient funds fees.
Hospitality fees
Have you ever gone to book a concert ticket and the final price was double what the listed price was? Thank junk fees. Consumers typically encounter hidden fees when booking a hotel room or buying a ticket to a live event.
These charges are often marked as “service fees” and don’t give much information as to what the money goes towards. Americans paid almost $3 billion in hotel resort fees in 2018, according to a study by New York University. You’ll often see these fees labeled as booking fees or processing fees.
Cable and internet fees
You’ll also frequently encounter hidden fees when dealing with your cable or internet subscriptions. Many providers may charge you for activating your account — including adding a new phone line or setting up internet — or canceling your service. Consumers paid $28 billion in cable fees in 2019, according to Consumer Reports.
Travel fees
Like hotels, airlines also charge fees for completing basic tasks, like canceling or changing a reservation. Many airlines have also started adopting added fees to check a bag or even check into your flight. With so many airlines, each with different rules, many consumers often need clarification and more clarity on how much total airfare will cost.
Americans paid almost $6 billion in airline baggage fees and change fees in 2021, according to the Department of Transportation.
Convenience fees
In the past few years, some retailers have started charging consumers to use a credit card, typically 1%-3% of the entire transaction. Most merchants already have to pay these fees to process credit card transactions and are now starting to pass those fees on to the customer.
What you can do about junk fees
Compare multiple providers
Comparison shopping can often help you get the best price on a product or service, whether it be a car, hotel room or flight. Yet it’s important to look beyond the sticker price and review all the costs that go into a purchase, including the fees. Each bank, hotel or retailer has their own way of charging fees. Be aware of how their fee structure works. Don’t be afraid to ask about different fees before making a purchase.
Try to negotiate or waive fees
If you notice a junk fee on your bank account or once you get to the check-out screen, consider reaching out to the company directly to try to negotiate or remove the fee. While this isn’t always guaranteed to work, it’s worth trying. Some providers will value your business enough that they’re willing to work with you. If you’re dealing with a credit card convenience fee, you may want to consider paying in cash to avoid it.
Review your bills and statements
Most of us pay our bills with a credit card or make payments automatically without taking full note of the charges. It’s important to go back and review your receipts and credit card statements regularly. Not only do you want to ensure everything is accurate and there’s no fraud, but it will also help you become aware of any added charges to your account. If you notice a fee you don’t recognize or suspect may be a junk fee, reach out to the company to get more clarity or dispute the charge.
Report junk fees to consumer protection agencies
If you experience a junk fee that you believe is predatory or fraudulent, you can report it to a consumer protection agency. For example, you could report a junk banking fee to the Consumer Financial Protection Bureau. These agencies will often investigate on your behalf and can take larger action against these companies.
Case in point: In 2023, Bank of America was fined $250 million by the CFPB for double-charging consumers for basic banking services.
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If you’re frustrated about a junk fee, chances are there are likely plenty of other consumers who have had the same experience. Consider leaving a review or filing a consumer complaint on the company’s website to share your experience and potentially warn others about the excessive fees.
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This article originally appeared on GOBankingRates.com: Hidden Fees Are Costing Americans Billions: What You Can Do About It
