Illustrated by Daniel Koppich.
Even the tightest budgets are rarely air-tight. Maybe you don’t overspend on groceries or entertainment, but you do end up paying for fees you were never expecting. Consumers are dinged with hidden fees almost everywhere they turn — from bank fees you almost never notice in your monthly statement to unexpected travel fees. In 2012, Americans spent $18 billion on credit card late fees alone, and while late fees aren’t necessarily disguised, they are part of the unbudgeted dues we pay for every month.
Just because these extra fees are often “hidden” doesn’t mean you should act like they don’t exist. In fact, by looking closely at what you’re paying on a regular basis and taking action to cut them down (or cut them out altogether), you could save yourself a bundle. Here’s a look at six common areas where you may be paying fees and siphoning money out of your budget without even realizing it.
One percent of bank profits from consumer checking accounts come from overdraft and insufficient funds fees, according to the Consumer Financial Protection Bureau. These fees are prompted when customers withdraw, make a debit card payment or make or attempt to make another type of payment for more than what is available in their accounts. But, overdraft fees aren’t the only extra fees consumers are paying to banks: The Great Recession signaled the end of many “free checking” accounts, so plenty of us pay a monthly fee for our checking accounts (either if you fall below a minimum balance or period). And, because most banks charge fees when non-customers use their ATMs, you may pay your own bank and the other bank if you make a withdrawal from an outside ATM.
Simple fees for having a checking or savings account can range from $15 to $25 per month, says Cristina Briboneria, CFP, vice president of Atlanta-based oXYGen Financial, Inc. No one should pay an extra $180 to $300 a year just to hold your money, she says.
In most cases, you can avoid paying fees for your checking and savings accounts by using your debit card monthly, linking your credit card for overdraft protection, carrying a minimum balance, or setting up direct deposits to your account. You may also avoid such fees by opening an account with a small regional bank or credit union, which can also give better interest rates on loans because they don’t have high overhead costs, Briboneria says.
If you need to make a withdrawal, try to use your own bank’s ATM to avoid fees. If that’s not possible, “head to a store like CVS that offers cash back for free and pick up a small item like gum,” says consumer and money saving expert Andrea Woroch. And, if you overdraw your account, as long as it’s not a habit, call your bank’s customer service hotline and ask if they can waive the fee. For customers who don’t abuse the privilege, many banks will reverse those charges.
Illustrated by Daniel Koppich.
Cell Phone Fees
Using a mobile phone has become a necessity for many people, but the price of a cell phone contract is rarely as low as expected. Every month’s bill will include extra fees such as an access recovery charge, charge for network access, universal connectivity fees, Federal Communications Commission charges, and federal excise taxes.
The best way to lower your cell phone bill is to determine your actual usage. “Sometimes people are paying for a higher data plan than they really need,” Briboneria says. “For example, if a person has a 6GB data plan but they’re only using 3.5GB monthly, it might make sense to lower the data package.”
If you’re still using a phone number you had when you lived in a different state or county, find out if you’re paying more for keeping that number. “Sometimes you might still be paying an additional tax for ‘roaming’ if you live in a new state or county,” Briboneria says.
Before signing a new cell phone contract, ask what the total charges will be each month, including fees, and compare the total price among competitors. Each month, review your bill carefully. “Since many consumers opt for auto pay and paperless billing, it’s easy to overlook hidden charges or incorrect charges,” Woroch says.
Also, make it a regular habit to ask the customer service representatives about promotions on cell phone bills to help lower additional fees. Maybe the company is offering a discount for customers who choose paperless billing or who pay automatically.
Shopping online adds convenience but can also result in high fees for shipping. Those fees can add up, especially if you often return merchandise bought online, because then you pay for return shipping, too. The most common complaint consumers have about returning online merchandise is having to pay for return shipping, according to a report from ComScore and UPS.
Rather than watching your shipping costs add up, shop with online retailers that offer free shipping both ways. If you’re willing to wait a little longer to get your shoes, Zappos offers free shipping all the time (on returns too). Amazon also offers free shipping with some products, and for Amazon Prime members, two-day shipping is always free. According to the ComScore/UPS report, 73% of consumers say free shipping options are the most important information or options at checkout. Before paying unnecessary fees, always look for free shipping coupons from sites like FreeShipping.org, says Woroch.
You can also choose to make online purchases from retailers that have a local brick-and-mortar store nearby that offers in-store returns if you aren’t happy with your purchase.
Illustrated by Daniel Koppich.
More than 80% of medical bills contain errors, according to the Medical Billing Advocates of America. Those errors may be simple mistakes, double billings, or in some cases, abusive charging practices. But, whatever the reason for the charges, you want to be sure you’re not paying more than you owe.
“Always check your bill from your doctor versus the Explanation of Benefits received from the insurance company,” says Mary F. Drueke-Collins, vice president of employee benefits at Swartzbaugh-Farber, a United Benefit Advisors partner firm. “Make sure all of the charges line up and that the doctor actually performed all those services.” If you find an error — maybe you are being charged for a test or scan you don’t remember having, or you see charges for a date when you didn’t go to the doctor — call your insurance company or the medical office’s billing department. It can be a hassle to find the right person to speak to and talk through the bill, but taking the time may pay off.
If you use “out of network” providers — doctors, facilities or other healthcare professionals that are not on your insurance company’s preferred provider list — you’ll also incur extra charges. “Preferred provider networks help reduce the charges when an in-network doctor is used,” Drueke-Collins says. “The insurance company reimburses out-of-network doctors according to a schedule or a percentage of the usual and customary amount. Often, the doctor’s charge is more than that reimbursement they receive from the insurance company. The doctor can then ask the individual to pay the balance, or the difference between what the insurance company reimburses them and their charges. If you use out of network providers, not only will you be responsible for your deductible, coinsurance, and copayments, but you may also be responsible for this ‘balance billing.’”
If you can pay in cash for doctor or dentist visits, rather than filing the visit with your insurance company, you can often negotiate a discount of 10% or more. A number of concierge medical practices now exist where patients pay a monthly fee of $199 or less and receive access to affordable medical care they need from a variety of doctors.
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Every time you travel, you’re likely to incur extra charges above and beyond the initial sticker price. After purchasing an airline ticket, you may have to pay extra for purchasing it online, through a third-party vendor or to check a bag at the gate. When you get to your hotel, you may encounter additional local lodging taxes, mini-bar fees, and charges for using Wi-Fi in your room.
Woroch recommends always asking about the total charges, including all the fees, before making a decision about where to travel. In some cases, you can avoid additional fees or get a discount by working with a travel agent. “Stick with airlines that include the extras in the price of the ticket already,” Woroch says. “For instance, Jetblue offers movies and a free checked bag. Southwest offers free snacks and two free checked bags, which is ideal for families traveling with lots of luggage.”
If you travel regularly and are loyal to one airline, consider applying for the airline’s credit card, Briboneria suggests. It may waive baggage fees or give you 10% to 20% discounts on in-air purchases. If there is a possibility you will change your travel plans, you can save money on change fees by booking your flight directly on the airline’s site rather than through a third-party provider like Travelocity or Priceline. “If you book your flight from a third-party website and you have to change your flight, you can incur an additional rebooking fee from that website, in addition to the airlines’ change fee,” Briboneria says. “Those fees can be an additional $100 to $200 in addition to the $50 to $150 change fees the airline charges.”
When staying in a hotel, avoid the convenience (and the charges) of the mini-bar in your room by bringing your own snacks and drinks along. Also, if wireless Internet access isn’t provided in your room, try to use it in the hotel lobby or other public spaces, where it’s often available for free, rather than paying extra to use the Internet in your room.