Fees for common items like mortgages, credit cards, bank accounts and online deliverables, among many others, can really add up, and do hit consumers hard in the pocketbook. Those we know about. But we’re also paying big time for things without realizing it. Ross Kenneth Urken, TheStreet’s personal finance editor, walks us through those hidden fees.
Hidden fees kill us. A new study by the Washington, D.C.-based National Economic Council shows that Americans lose "billions of dollars" from such hidden fees. Another study of communications firms like AT&T, Verizon and Comcast by the Consumer Federation of America pegs hidden fee costs at $60 billion annually.
The CFA's "Hidden Fees" report documents a pervasive pattern of abuse across many industries. One hidden fee that really gets to me widespread manipulation of the 'fuel surcharge' by the airlines. For a while, as oil prices surged, they made sense to tack on to your ticket. But now that oil is low, the charged have remained. That’s not fair!
Retirement investing is a "great place" for hidden fees, because, in many cases, by the time the consumer realizes that there are hidden fee's it's too late. Annuity fees are especially burdensome. There may be some times when annuities are appropriate, but they are complicated, expensive. Also, watch out for target-date funds in your 401(k), which have needlessly high expense ratios.
One of the worst hidden consumer fees are the service and foreign exchange rate fees traditional remittance players like Western Union and Moneygram charge consumers who are trying to send money to loved ones abroad. For example, traditional remittance players like Western Union and Moneygram charge an 8% to 10% service fee of the total volume a consumer sends. Instead, look to Venmo and PayPal. Or for cash, consider something like WorldRemit or TransferWise.
Be on high alert for “resort fees” – that just tack on money for things that should be included like fresh towels. And any resort or hotel charging for WiFI this day and age, is sacaming you.
Outside of the cable/telecom arena, the mortgage sector may well boast the most hidden fees. "When applying for a mortgage, a borrower can be hit with all kinds of obscure fees like processing fees, notary fees, courier fees, even fees for sending emails. Before paying the mortgage application fee, the borrower should ask whether any of the fees are waivable.