Filed under: Banking, Personal Finance, How to Save Money, Consumer Protection, Debit Cards
Even when fees are disclosed, there is something about them that is both irritating and frustrating. Why not show the total price upfront, with the fees clearly identified? When consumers don't notice the buried charges until right before payment, or when fees are kept out of sight for months on end, the sense of being ripped off is palpable. Here are 10 fees consumers may not see coming -- or pay without knowing it.
Unauthorized phone charges. Even legitimate phone fees can be confusing and annoying, but some service providers have tried adding unauthorized fees as well -- a practice called "cramming." Look for and investigate fees listed with vague descriptions such as "calling plan," "membership," or "voicemail." If they don't check out, the Federal Communications Commission has advice on how consumers can protect themselves and file a complaint.
Modem or router rental. The modems or routers rented out by Internet service providers may be necessary, but the recurring monthly rental fee is easy to forget and may go on long past the value of the device. Spend a little upfront to buy the hardware and avoid the extra monthly charge. The purchase can often pay for itself in less than a year.
Closing costs. First-time homebuyers agree on a price but can be caught unaware by all the expenses required to finalize the purchase. Property appraisals and inspections, homeowners insurance (often mandatory to obtain a mortgage), and attorney fees are all common for a home sale. They can't be avoided, but some can be decreased by shopping around, and sellers can sometimes be convinced to pay closing costs. Don't forget to leave enough money after fees for moving.
Overdraft protection. Many people sign up for overdraft protection with their bank because it seems like, well, protection from overdrawing an account. It is true that instead of paying an overdraft charge -- often more than $30 -- funds are transferred from a linked savings account or credit line to avoid bouncing a payment. The transfer, though, usually costs about $10. Instead, investigate whether a bank offers apps or text-message services that let customers transfer money on their own. (Automatic payments, such as subscriptions, may go through despite insufficient funds and can result in an overdrawn account.) Alternatively, opt out of overdraft protection and make sure the bank doesn't charge the service to your account; in that case, a purchase you can't pay for will be declined.
Investment fees. Investing can be so complicated that many people do not realize the fees they are paying. For example, a financial adviser might take 1 percent each year of the money being managed. And some of the investments may charge fees on top of that: A mutual fund could charge a fee at the initial investment or when the investment is sold. Look out for 12b-1 fees, which pay for marketing but get wrapped up in the total expense ratio (what money managers get paid annually) and try to choose funds without them. Retirement accounts, such as 401(k)s or IRAs, may also impose management fees or make investments with all sorts of expenses. Use the free service FeeX to check current fees and test potential investments.
Foreign transaction fees. Merchants around the world are happy to take credit cards, but making a purchase in a foreign currency can come with an extra charge. Many credit cards add 1 percent to 3 percent on top of the purchase as a foreign transaction fee. Avoid this by paying with cash, or use a credit card that waives foreign transaction fees.
Hotel resort fees. Hotels in popular tourist destinations often charge resort fees ranging from $10 to more than $30 a night -- sometimes neither clearly disclosed nor included in the price shown on third-party booking sites. Ask upfront about fees to avoid the expensive surprise of learning about them upon check-in. Resort fees are sometimes charged even for rooms booked with points or free-stay vouchers.
Rental car surcharges. Rental cars may cost more coming from airport locations. A quick cab ride can save money: Often there are lots -- even some from the same company -- close to the airport but not considered part of it, where daily and weekly rates are lower and the price includes fewer fees.
In-room hotel services. Some hotels charge a fee for use of an in-room safe or delivery of a morning paper -- even for guests who don't need or request these services. Some minibars have sensors that detect weight changes, and moving items in the fridge or using it for your own drinks or leftovers can trigger a minibar fee. A call to the front desk should clear this up, but check the bill closely before signing. Even better, be wary of fees before checking in. That's the time to ask about potential charges and request that superfluous fees be waived.
Prepaid card fees. Consumers who don't want, or can't get, a bank account may turn to a prepaid debit card as an alternative. Prepaid cards are like gift cards, but many are tied to a credit card network such as Visa or MasterCard. They are accepted in the same places and can be reloaded with money. Some charge users to activate the card, reload it, and check balances, and there may be monthly maintenance fees, as well as fees every time a card is swiped. The best prepaid cards have low fees and offer ways to avoid other fees, such as setting up direct deposit to have the monthly charge waived. The Simple Dollar recommends six cards and provides tips on how to avoid fees.
Halloween's almost here, and that means trick-or-treaters and lots of candy, but how do you get all those sweets without taking a big bite out of your savings? We'll show you how with these scary great ways to save this Halloween.
