(DailyChive.com) – Many Americans are charged various junk fees for services that cost a business little or nothing. In his 2023 State of the Union Address, President Joe Biden promised to crack down on junk fees that unnecessarily supercharge consumer expenses.
As the government implements the Junk Free Prevention Act, you can also take your own measures to minimize or eliminate junk fees in your everyday transactions. This post explains what junk fees are and the steps to take to avoid them entirely.
What are Junk Fees?
Junk fees are unnecessary and surprise charges to consumers for services that cost a business little to nothing. These fees can be divided into three main categories, including:
- Undisclosed mandatory charges: These are fees that aren’t disclosed before making a transaction. You only realize them after purchasing a product or service.
- Optional charges portrayed as mandatory: These are non-mandatory fees given official names to sound like they’re a must to consumers.
- Hidden mandatory charges: These are fees buried in long fine prints and documents to discourage consumers from reading.
Junk fees increase the overall cost of consumer purchases. In March, the Consumer Financial Protection Bureau announced efforts to combat junk fees once and for all.
Where Do Junk Fees Tend to Hide the Most?
Junk fees can be found across a litany of services in different markets. These include:
Financial Services
Most credit card, payday, and student loan lenders charge convenience fees for processing loans, interest and late fees for not paying debts on time. They also charge overdraft fees and hidden ATM transaction fees.
Real Estate (Mortgages)
Mortgage lenders charge fees for property inspections, mortgage insurance, late fees, and penalties for failing to adhere to Department of Housing and Urban Development or (HUD) rules. In addition to these, they charge closing fees on a home that cut into the household’s equity.
Auto Loans
Vehicle loans come with processing fees, high-interest rates, and fake and excessive late fees. They also have vehicle repossession fees for retrieving your vehicle after clearing your entire loan if your vehicle gets repossessed.
Traveling Services
Most airlines charge additional booking fees for families traveling together when booking seats next to each other. Hotels and resorts also charge hidden fees for services and event tickets on top of what they initially advertise.
What You Can Do to Avoid Junk Fees
Although the government is doing its best to put in place policies and regulations on unnecessary junk fees, take the following steps to avoid these fees yourself:
- Read every detail before signing, paying, or agreeing to a deal
- Never agree to pay for services you didn’t read about
- Ask whenever you don’t understand a fee in the fine print via email or call
- Do comparison shopping of different businesses to get the best and most transparent deals
- Walk away from transactions with fees you understand and never receive an explanation for them
- Pay using a credit card as undisclosed fees are easier to dispute via credit card than debit card or cash
- Keep all copies of receipts, emails, agreements, and texts you have with a business
- Record the names of all service members you talk to via call or email to strengthen your fight against a junk fee
Lastly, if you’re charged a hidden or misleading fee, complain to the company through the official channels and file an official complaint with your State Attorney General’s Office of Consumer Protection or the Federal Trade Commission (FTC).
While junk fees may not matter to the well-off, they matter to average citizens – who are the majority. Don’t let surprise fees increase your cost of living or prevent you from enjoying that vacation or taking a credit card. Take these steps to avoid hidden and surprise fees.
Copyright 2023, DailyChive.com
