Byline: Eileen AJ Connelly Associated Press
NEW YORK Fed up with your hard-earned money going to big corporations while youre struggling to get by? Want to do something about it?
Youre not as powerless as you think.
Its not just tax dollars that get funneled to big companies. Consumers spend billions each year on fees and add-on charges, many of which are unnecessary, and often because theyre just not paying attention.
Take credit cards. MasterCard, Visa and other bank card customers paid $14.6 billion in 2008 just in penalties such as late payments and over credit limit fees according to Brian Riley, research director for Bank Cards at TowerGroup, a financial services advisory firm near Boston.
And thats just the beginning. Fees and surcharges are added to household bills, travel costs, banking, phone bills and more.
Some of these line items cover things like taxes that companies must pay. But often, those add-ons produce extra profit. Like the $2.50 "restocking fee" some hotels charge on top of the exorbitant prices for beverages in a mini-bar. Hotels generated $1.75 billion in revenue from fees and surcharges last year, according to New York University professor Bjorn Hanson, who studies the hospitality and travel industry. "It has become a major source of revenue, but even more important, profits, for hotels."
Consumer advocates see such charges, which they call "a la carte" fees, as misleading. "The trend is to deceive consumers into thinking the price is still the same, by adding fees and extracting services that used to be included," said Edmund Mierzwinski, a senior fellow at the advocacy group U.S. PIRG.
And there is more downside than just getting a larger bill than expected. "A la carte pricing is really not good for consumers because it essentially prohibits them from doing legitimate comparison shopping," said Jack Gillis of the Consumer Federation of America.
An online search may find the best airfare, for example. But if each person in your family of three has two suitcases, bag-check fees could range from nothing to $120. That makes it harder to figure out which flight is the really best option.
The proliferation of fees got a boost last year when gasoline prices skyrocketed, Gillis noted, with new charges added to everything from air travel to shipping costs.
Despite lower gas prices, expect that trend to continue and not just from major companies going after your nickels and dimes.
Witness that Gillis recently learned of some restaurants charging for the bread basket that used to appear on the table for free.
And when adding $25 to his daughters elementary school cafeteria account not long ago, J.J. Montanaro of San Antonio, Texas, realized the school would add a $2.50 "transaction fee" if he used a credit card. Sending in a check cost nothing extra, said Montanaro, a financial planner with USAA.
There are many fees consumers cant avoid, but some may be negotiated, and others dodged by changing habits or payment methods. But the first step is knowing they are being charged, which involves scouring your bills, receipts and account statements.
Here are 20 fees and charges you can look to cut out, potentially saving hundreds of dollars a year.
Household bills
* From small home security firms and heating oil delivery services to major telecom providers, a growing number of companies are charging "manual billing" fees for sending paper bills and statements, sometimes up to $3.50 a month. Sign up for e-mail billing or check your statements online instead and save up to $42 a year.
* Homeowners and auto insurance can often be paid in installments, but spreading out the payments comes at a price. Fees vary, but expect $4 or $5 tacked on each month for installments, or up to $30 extra for a six-month policy.
* Utilities, cable and Internet providers now commonly charge as much as $15 for making a payment over the phone what Mierzwinski calls a "pay to pay" fee. These fees are often waived online, so set up your accounts on the company Web sites in case you have to make a last-minute payment.
Gift cards
* Gift cards in the rack at your local supermarket can contain a rack of fees. For those with bank card logos like MasterCard, Visa and American Express, you may pay purchase fees up to $6.95. There can also be separate charges for activation, ATM withdrawal, and monthly maintenance if the card sits unused. Fees and regulations vary from state to state, so check the fine print on the packaging. Also check with your bank to see if they sell gift cards with lower fees.
Phone bills
* Cell phone companies will charge up to $200 in "termination fees" if you cancel a contract early. Some prorate the fee to reflect the time left on the contract, but check your end date before switching services. If riding out your plan isnt an option, check out a contract trading service, like Celltradeusa.com, ReCellular.com or Cellswapper.com, where someone else may bid to take over the remaining portion of your contract.
* Telephone companies often charge separately for services like voice mail, call waiting and caller ID, along with local and long distance calling. Some of these features may duplicate service you have on your cell phone.
Compare both bills, and cut out services you dont need.
* If you use a service and pay extra fees like roaming charges on your cell or if youve started texting frequently but still pay for each message you may be able to save by adjusting your plan to one that includes more options.
Travel
* Ask hotels and resorts if they charge fees for amenities like fitness centers or pools when you make a reservation, and again when you check in, advises David Lytle, editorial director of Frommers.com. If youre not going to use certain facilities, negotiate with the hotel before you sign anything that allows them to bill your credit card, he advised.
* When booking a flight, watch out for charges like selecting an exit row seat ($20 at AirTran Airways), seats with more legroom ($35 at Spirit Airlines) and even picking a seat in advance of the flight ($5 to $35 at Northwest Airlines). Wait until you get to the airport on the day of travel and you may be able to avoid fees.
Common fees charged by airlines are detailed on the travel site Kayak.com.
* Pack light. Airlines wont just charge you for checking your bags, theyll sock you with another fee if any are too heavy up to $175 on Delta, for instance. If that heavy bag is also "oversized," youll be hit up for more, as much as $175 on United. With most carriers, including American, Continental, Delta, and United, these fees can be cumulative, so check the airlines Web site for its baggage restrictions before you pack. Bag fees are less common on international flights. Plus, you may be able to get some fees waived if you are a member of certain frequent flier programs, like American Airlines premium programs, or if you hold an airline-linked credit card like Continental Airlines Chase cards.
* Midrange and discount hotels often offer free Internet service, but higher-end locations tend to charge, sometimes as much as $19.95 per day. If your hotel wont waive the fee, check out WiFiFreeSpot.com or JiWire.com to find free service nearby.
* If you travel with your pet, you are likely to find yourself lapping up extra fees. Even self-proclaimed "pet friendly" hotels typically charge daily fees, starting at about $10 per pet, and in some cases additional per-stay fees up to $200.
* For years, savvy travelers have known using a credit card overseas could help save on exchange rates and fees. But credit card companies now typically add a foreign currency conversion charge of up to 3 percent. Lytle, of Frommers.com, said a strategy that will save on fees is to use a credit card only for large purchases, and use ATMs to withdraw cash for minor spending.
Banking, investing
* Banks charge $10 to $38 for overdrafts, with the median about $27, Federal Deposit Insurance Corp. data says. These fees are getting more common as debit card use grows. So be keep your account register current, and be mindful of debit card spending, ATM withdrawals and any automatic payments that you have set up.
* The fees for using another banks ATM have crept higher, and its not uncommon to see $3 to $4 charges. Using another banks machine may also trigger a fee from your bank. Search for your own bank when you need cash, or try getting cash back when making debit-card purchases. Even if your bank also charges a fee for debit-card purchases, that may be a less costly option than using an ATM.
* Banks may charge fees for frequent teller transactions or even for calling customer service. Wells Fargo, for instance, will charge you $2 to speak with a person, if your request could have been handled by its automated service. Check your banks Web site and the fine print on your statements to learn your banks policies.
* If youve switched jobs and left 401(k) accounts sitting in former employers programs, youre likely paying unnecessary management and servicing fees. These fees are often deducted directly from the assets of the funds you hold.
Credit cards
* Pay your bill late and expect to get socked with a fee of $30 or even $45. If youre prone to forgetting the due date, set up an automatic payment through your bank account.
* Rather than decline a purchase, credit card issuers now are just as likely to allow you to go over your limit and charge you a fee, typically about $35, says Adam Levin, chairman and founder of Credit.com. Youll get charged even if youre just a few cents over your limit, and even if its something like a late payment fee that puts you there.
* Annual fees are less common than they used to be. Now appearing mostly on rewards cards, the size of the fees has risen to $50 to $150. If you pay an annual fee, make sure youre getting a worthwhile return from your rewards. If youre not, ask to have the fee waived or try to switch to a no-fee card.
