How to spot and protect yourself from hidden feesJanuary 17, 2020
There’s the West Chester, Pa., woman irate over the $25 broadcast and sports fees she pays every month though she never watches sports—and about the $150 cancellation fee when she quit her provider.
Or the traveler in Texas who found that every time he went through a highway toll, the car-rental company dinged him $15 on top of the toll price, leading to an extra $90 in “administrative fees.” “They will charge $15 to process even a 31 cent toll charge,” he says. “Completely ridiculous!”
How about the music lover in Charlotte, N.C., shocked to find that after fees were added in, his concert ticket actually cost $123.18, not $99.95. Why can’t it be that “the price shown is the price paid?” he wanted to know.
Those are just three of the roughly 3,480 Americans who wrote to Consumer Reports over the past 13 months angry about the growing number of fees showing up on their bills, all as part of CR’s “
What the Fee?!
” campaign. “And more stories keep coming every day,” says Anna Laitin, director of financial policy at CR. “The stories show just how many fees people face, and how frustrating people find them.”
The High Cost of Hidden Fees
For a typical American family, these fees can pose a financial strain, adding up to thousands of dollars a year in extra costs (see “A Year in Fees: One Family’s Story”). On a national level, data from a few industries alone show that add-on charges are siphoning billions of dollars from Americans’ wallets every year.
In the case of airlines, for example, the two main travel charges—
reservation change fees
—accounted for a combined $7.6 billion in revenue in 2018, up from $6.8 billion in 2015, according to the Bureau of Transportation Statistics.
For banks, overdraft fees are a growing source of revenue, with the largest banks pulling in $11.5 billion in overdraft charges in 2018, up from $11.2 billion in 2015, according to an analysis of Federal Deposit Insurance Corp. (FDIC) data by the Center for Responsible Lending, a nonprofit consumer financial advocacy group.
The hotel industry, meanwhile, raked in a record $2.9 billion in resort fees and other fees and surcharges in 2018, with even more expected for 2019, according to Bjorn Hanson, Ph.D., a hotel consultant and clinical adjunct professor at the Jonathan M. Tisch Center for Hospitality at New York University.
What Are We Being Charged Extra For?
The explosion in add-on fees may be an outgrowth of the rise of online shopping websites such as Expedia and Hotels.com, which allow consumers to quickly compare prices from multiple sellers and to zero in on the cheapest options. That stepped-up price competition has helped to lower prices for many goods and services.
But there’s an unintended consequence: As companies strive to become the…