Junk fees have been in the news this year — mostly because of the Biden administration’s declared war on junk fees. But where exactly are junk fees, and what can consumers about them?
Junk fees are unexpected and sometimes hidden fees that companies charge for a service that costs them little or nothing to provide, and they turn up in everything from concert tickets to mortgage contracts to bank accounts.
Here are three areas of spending where you’ll likely encounter these fees. We’ll also look at the different types of junk fees to pay attention to in case you believe you’re overpaying.
[Related:Inflation Calculator: See How Much Inflation Is Costing You]
Travel
If you often fly with a budget airline, you’re probably aware of the slew of fees they charge for everything from seats to baggage.
“Over the last decade or so, we have seen a surge in the popularity of budget airlines,” says Mercedes Zach, a spokesperson with ASAP Tickets, a global travel agency.
The big selling point with these carriers is that they can offer “a relatively affordable flight ticket,” she says, adding: “Often, the cheapest ticket only buys you a seat on the plane. From there, you can decide which additional services to add, be it a meal, checked baggage or, in certain cases, even a specific seat assignment.”
One caveat: “Drawing the line between actual ancillary services and so-called junk fees, which should be regarded as malpractice, may not always be easy,” Zach says.
Here is where you will often encounter travel fees:
— Seating. Some airlines charge seat selection fees, which can run between $25 and $100, making it more costly for family or friends to sit together.
— Airline ticket cancellation fees. To cancel a ticket, airlines often charge well north of $50. So if you’re booking a flight, look up the ticket cancellation policy before you buy an airline ticket.
— Baggage fees. Baggage fees arguably become junk fees in the sense that some passengers don’t realize how much they’re going to pay until they’re at the airline counter.
[Read: Best Travel Rewards Credit Cards.]
Banks
For decades, banks have been known for their fees, especially overdraft fees. But let’s give some credit where some is due. Some bank fees have been on the decline in recent years. In 2019, overdraft and nonsufficient fund fees peaked at $11.7 billion, according to the Federal Reserve Bank of St. Louis. In 2022, the most recent numbers available, banks collected less than $8 billion.
To watch out for bank fees, pay attention to:
— Monthly account maintenance fees. Arguably, if you’re keeping money in your bank’s account, you shouldn’t have to pay for the privilege.
— ATM fees. Some ATM fees surpass $4. ATM fees get really egregious when you withdraw from an ATM that isn’t in your bank’s network.
— Overdraft fees. Some banks have dropped overdraft fees, but others still charge them when you don’t have enough money in your account to cover a transaction.
[Read: Best Online Banks.]
Renting
There are numerous fees renters should look out for. “From a consumer advice standpoint, it would be advisable for people to pay close attention to their rental agreement before signing,” says Barry Coleman, vice president of program management and education at the National Foundation for Credit Counseling.
He adds: “Consumers may want to check with the attorney general’s office in the state where they are renting to determine the legality of any such fees as each state could have different requirements.”
If you’re a renter, pay attention to these fees:
— Application fees. There’s a reason for an application fee. With the money, the apartment manager or landlord often pays for a background check on the tenant. It’s understandable that a company might not want to spend that money. But if you’re apartment hunting and end up applying to several places, it’s a fee that really adds up for an individual or family.
— Technology fee. Are you renting an apartment with features such as keyless entry or a smart thermostat? You may also be asked to pay a technology fee for high-speed internet, cable TV and Wi-Fi in common areas.
— Administrative fee. The administrative fee protects the landlord between the time you’re planning to move in and when you actually move in. The administrative fee may also go toward the first month’s rent.
— Move-in fee. This fee generally goes toward deep-cleaning your new place.
[READ: What to Do If Your 401(k) Plan Has High Fees.]
Other Junk Fees
Businesses exist to make a profit, and sometimes consumers complain about fees that a company has every right to charge. But here are some fees that can easily turn into junk fees.
— Late fees. One one hand, companies have every right to charge customers who are late with payments. But are some businesses overly punitive with their late fees? Perhaps. For instance, the Consumer Financial Protection Bureau proposed a rule that would lower credit card late fees to $8 from up to $41, a common late fee with some credit cards.
— Convenience fees. Some states don’t allow convenience fees, which businesses charge for paying in a way that is not standard, such as with a credit card over the phone.
— Restocking fees. When you return merchandise to some stores, especially online merchandise, you may be asked to pay a restocking fee, which generally means you’ll get your refund minus the restocking fee. It’s wise to check a company’s refund policy before you return an item, especially if there’s a brick-and-mortar store you can go in to avoid the restocking fee.
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Where to Look for Junk Fees originally appeared on usnews.com
