By: Editorial Staff, Date: December 26th, 2022
Today, the high cost of junk fees imposed by some companies is hitting the most vulnerable consumers to the core. While these unnecessary fees offer no benefits to consumers other than adding costs to their bills, they eclipse the actual cost of a product or a service. This article will discuss the common types of junk fees and how we can detect them.
What is a Junk Fee?
A junk fee is a surprise cost charged to a consumer’s bill after signing up for a product or service. Also called hidden fees, they are usually excessive charges and are often made without clear disclosure. Nothing can be more frustrating than paying for a product or service without a clear understanding of what we are paying for.
Common Examples of Junk Fees
From the inflated cost of “service charges”, junk fees come in many forms and impact consumers’ everyday finances. Here are some examples of junk fees that are often seen when using a financial product or service:
- Late Fees – These are penalties imposed for not paying on the due date. In addition to transaction fees and annual fees, credit card users are impacted by paying late fees.
- Prepaid Card Fees – For people with no bank accounts, prepaid card services are used for paying bills and accessing basic financial services. Most prepaid card fees include monthly fees and transaction fees.
- Account Fees – Banks make billions yearly just for overdrawn fees. These types of charges are quite common when you open a deposit account. Banks and financial institutions also impose other hidden charges, including fees for late penalties, minimum balance, inactivity, and maintenance.
Easy-To-Do Tips: How to Spot Them
- Check for any “misrepresented costs” on bills, especially those advertised as “no-fees”.
- Price shop before purchasing a product. Ask for an itemized list of fees before paying for a service or a product.
- Dispute any suspicious or blatant fraudulent add-ons. Putting a dispute into writing is also beneficial to avoid late fees while waiting for a resolution.
- Understand the price of the product or service before making any purchase.
In the wake of President Joe Biden’s campaign against junk fees, awareness comes to the fore of our protection against unfair practices in the market. Before making any purchasing decision, getting smart doesn’t only give us the best deal for our money. It also gives us the most of our purchasing experience.
For more updates on the banking and finance sector, check out our complimentary webcast: Regulatory Trends to Watch Out for in Consumer Finance
Sources:
https://marketrealist.com/personal-finance/what-are-junk-fees/
https://www.consumerfinance.gov/about-us/blog/hidden-cost-junk-fees/
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