Have you ever bought a product or service then looked at the receipt and discovered a hidden fee? Fees are a major pain and they seem to pop up everywhere. Luckily, there are a bunch of easy tactics for avoiding fees, and we’re going to lay them all out in this post.
We’ll also include a checklist to help you avoid or negotiate fees in your life. The more you fight back against pesky little fees, the more money you keep in your pocket for stuff you truly value.
Fees are Everywhere!
While some fees are sneaky and hidden, others are boldly displayed in plain sight. You can find them tacked on from different industries such as resort stays, parking, Wi-Fi, subscriptions/memberships, and even retirement accounts. (Actually, fees are very common with anything to do with money – bank fees, retirement fees, advising fees.)
For a typical family, these fees can create a meaningful financial strain, causing them to rack up thousands of dollars per year in additional costs.
- 85% of Americans have encountered an unexpected or hidden fee over the past two years.
- 67% of Americans say they are paying more now in surprise charges than they did five years ago.
- 96% of Americans find hidden fees annoying.
Survey by Consumer Reports (CR).
Fees have all sorts of different lingo ascribed to them. This is usually in an attempt to lessen their blow or make them sound “official.” But, they are pervasive nonetheless. Fees come disguised as cancellation fees, processing fees, service fees, administrative charges, and resort fees, etc. My favorite is the convenience fee. More like, inconvenience!
Did you know, Ticketmaster charges up to 37% of the face value in fees – and it’s not just one, it’s multiple. This Includes fees for the “convenience” of printing your tickets at home.
Regarding your retirement account fees – paying commissions to a broker for actively managed funds and coughing up sky-high fund expenses will eat away at your wealth substantially. You might see fees as an unavoidable cost of investing, but that’s just what the financial industry wants you to believe. A fee as low as 1% could easily cost you more than $500,000 over your investing lifetime.
Needless to say, avoiding fees is certainly worth it!!! Fees not only erode how much money you have to invest now, but they lessen the amount of money that is compounding in your account yearly – the impact is twofold!
Fees are Sneaky
One of the reasons fees are becoming more ubiquitous is that our shopping behavior makes us susceptible to them. A study of StubHub fees revealed that consumers spent 21% more if they weren’t shown the fees until the end of the purchase. Basically, we get frustrated and still click buy despite the higher ultimate price. However, if the cost had been pricier upfront we likely would have abandoned our purchase. That’s a sneaky tactic!
Even as we’ve become accustomed to seeing more fees, even when we’re being blindsided, there are still ways you can mount a legitimate opposition to those encroaching, unwanted fees. It’s your money, what are you willing to do to protect it?
12 Most Common Fees and How to Avoid Them
Let’s discuss some of the most prominent fees you’ll encounter and strategies to either lower the amount or avoiding fees all together.
1. Overdraft fees
This is the most egregious fee of them all. A $3 coffee could end up costing you $35 or $40 since the average overdraft fee is $33.36. In fact, U.S. banks make about $15 billion a year on overdraft and NSF fees! This is one of the reasons that we prefer credit cards for most folks when making purchases.
But here’s the thing, even though overdraft fees are insanely expensive, you don’t have to ever pay for one again. Thanks to federal law, overdraft fees can be avoided by opting out of your bank overdraft protection service. You can usually do this online, or call the bank if you need help turning it off. But make sure to do this so you never pay this obscene fee again!
2. Avoiding fees at ATM
How often do you really need cash these days? If you do like to hit up the ATM, we want you to do business with a bank that reimburses those ATM fees – because they’re not cheap!
Some banks offer you access to a network of machines that you can use free of charge. Others will let you use out-of-network ATMs and then reimburse you up to a certain amount each month. For example, with Ally bank, you can use any ATM you’d like, but they’ll only reimburse $10 every month. But if you’re a frequent ATM user, Charles Schwab reimburses an unlimited amount of ATM fees!
3. Monthly checking account fees
A recent Bankrate survey found that nearly 30% of Americans still pay fees for the ability to bank with an institution. The average monthly fee is $24. That means these folks are paying bank fees that equal $288 a year. That’s a lot of money being essentially flushed down the toilet!
What’s the answer?! Stop doing business with banks that nickel and dime you every chance they get. Go to a bank that doesn’t charge fees for low balances, monthly account fees, or demand regular direct deposits. The best way to avoid these fees is to avoid the biggest banks. The best online banks don’t partake of these nefarious fee-laden tactics!
We’ve written extensively about how to switch to a lower fee bank. We really like online banks because of their commitment to eliminating fees, better customer service, and the superior apps they offer.
Lastly, if you must use a traditional bank that charges account fees, learn about the ways to avoid them by setting up direct deposit, switching to a lower tier checking account, or maintaining a low minimum balance to avoid the fee.
4. Foreign transaction fees
These have become a lot easier to avoid recently as they are a common perk of modern credit cards. Make sure you check the fine print on your card accounts before traveling. Cards like Capital One’s Venture, Chase Sapphire Preferred, and all of Discover’s credit cards don’t charge that foreign transaction fee.
Here’s a current running list of all the top credit cards that don’t charge foreign transaction fees.
Lastly, when you are traveling abroad and need physical cash, the most straightforward way to avoid a fee is to simply take out money from an ATM at your destination. Airport exchange services or purchasing foreign money from your local bank are almost always much more expensive.
5. Utility payment fees
Oftentimes you’ll be charged 3% or more to pay your water or electric bill online with a credit card. It can be frustrating to not be able to use a card when otherwise you know that you can earn cashback for those payments. But it just doesn’t make financial sense to use a credit card if you’re being charged a fee of that magnitude.
In this case you’ll want to opt to pay with your checking account instead in order to avoid this unnecessary fee altogether. Here are some other ways to lower your gas, electric and water bills!
6. Late fees
OK, this one’s kind of your fault. The best way to avoid late fees → is to not be late in the first place!
Setting up calendar reminders or automatic payments is the best way to nip late fees in the bud. Fortunately, even if that payment slips your mind, these fees can be waived a lot of the time by just making a simple phone call.
Related, here are some tips on how to ask for a discount, including waiving late fees.
7. Avoiding Fees for Baggage
Baggage fees continue to grow as a revenue source for U.S. airlines, which collected a record $5.1 billion in 2021 alone. With the different websites that aggregate and price compare airfare for you, we’ve become very price sensitive.
A lot of airlines are racing to the bottom trying to get their tickets sold as cheaply as possible. In order to recoup some of those price cuts, airlines institute some ridiculous fees. Everyone hates checked bag fees, but some airlines are charging for things as silly as printing your boarding pass for $10 or charging $3 for water (we’re looking at you Spirit!).
Instead, consider sticking with Southwest where you can save by only taking carry-on luggage and printing your boarding pass yourself.
Does flying the ultra-discount airlines ever make sense? Sure! Sometimes you’ll save hundreds on your fare because of their fee-happy business model that carriers like Spirit and Frontier have popularized. Just make sure you know the fees ahead of time and factor them into your calculations before you book.
Packing lightly helps avoid baggage fees. No, you don’t need 15 dresses for a three-day vacation!
8. Hotel fees
While a great price for a room may seem appealing, make sure you’re aware of the additional fees that can get tacked on to your “affordable” stay. For example, many travelers don’t consider daily parking charges, required resort fees, or the cost of Wi-Fi when budgeting for their hotel bill.
In some instances, hotel fees can be waived by booking directly with a hotel or by simply asking the front desk. In other cases, it may be wiser to simply find a less expensive hotel or one that charges fewer fees.
Here are some other ways to save money on travel. Thankfully, AirBnB and other home sharing platforms are making many of their fees more transparent.
9. Sports/concert ticket fees
A while back, Jerry Seinfeld did a comedy show in my town. I wanted to buy four tickets (through Ticketmaster) and was astonished that each ticket purchase would have $28 of junk fees added! That killed my budget and would only allow me to purchase the nosebleed, cheap seats in the balcony.
That’s when my frugalness kicked in…I discovered that by simply buying the tickets from the box office (ticket window) at the theater I could avoid the additional fees. Saving the $112 in fees allowed me to upgrade my seat selection to a more expensive section in the lower level, thus enhancing my enjoyment of the show!
So if you’re buying concert tickets or seats at a sporting event, check with the venue to determine if you can purchase fee-free directly at the box office.
10. TV fees
Regional sports fees, HD fees, broadcast TV fees, modem fees, etc. These are all added to your monthly cable bill as part of your viewing pleasure. But those fees add up. So join the cord cutters and ditch cable TV!
Subscriptions are amazing, but they are also a slippery slope with all the add-ons. Be sure to regularly review your subscriptions to make sure you’re taking full advantage of services. Don’t hesitate to cancel one when you find yourself not getting value from it.
There are a number of free TV options available. Pluto TV, Tubi, The Roku Channel are a few good ones. Also library apps offer free TV and movies too! Hoopla and Libby are great to check out and most local libraries have a DVD section if you want to kick it old-school.
Lastly, just buying a good quality TV antenna can give you access to channels you would otherwise have to pay a fee for. CNET rates best ones around $20 – $30.
11. Car buying fees
There can be a lot of fees involved in purchasing a car such as destination fees, documentation fees, advertising fees, and dealer preparation fees just to name a few. Be sure to point them out and negotiate each fee. Be willing to walk away if what they are asking is truly unreasonable!
And better yet, buy used. A used car that’s in good condition will save you big bucks in addition to removing fees from the equation!
12. Closing costs and home buying fees
Home purchasing fees associated with closing costs, such as document preparation or title insurance, can act as a significant barrier to families trying to buy or refinance a home. This can severely cut into household equity.
Many of these fees can’t necessarily be avoided, but some can be decreased by shopping around. Additionally, sellers can sometimes be convinced to pay a percentage of the closing costs.
Avoiding Fees Checklist
Here are some additional tips and strategies for avoiding the dreaded surprise fees while being more mindful with your spending:
- Check for fees -– First, review your credit card bill every month. Notice anything odd? You might be paying for services or fees you forgot about or potentially didn’t even sign up for. Step one is to get your financial house in order.
- Cut back – Be open to reduced services. For example, if your cable company is sticking it to you, it’s time to jump ship and avoid high charges and ridiculous fees. (Check out podcast episode 542 cutting the cord and the best streaming options.)
- Switch – Be willing to change providers. Switch banks or cheaper cell phone services. Any time you can prioritize doing business with a company that avoids fees and prioritizes price transparency and customer service, do it.
- Waive – If you do find yourself with an unnecessary fee, remember that the squeaky wheel gets the grease. Just like we encourage each other to ask for a discount, we’re encouraging you to ask for your fee to be waived.
- Live Chat – I’m a huge fan of the “chat now” or the “live chat” options that banks and retailers are including on their websites, because it’s easy and I can multitask. Keep working while they waive that fee.
- Social media – One of the most effective ways to avoid fees is by reaching out to businesses over their social media platforms (Twitter is my fave). As you might expect, companies work hard to prevent negative attention and prefer not being blasted on social media.
- Word of mouth – Got stuck with a crazy fee? Share your plight with friends, family, neighbors, and coworkers to see if they have a similar story and what they did to resolve it.
- BBB – If you feel like your fee is unjust or potentially unlawful, file a complaint with the Better Business Bureau (BBB) or a government agency like your state attorney general or the Consumer Financial Protection Bureau (CFPB).
The Bottom Line
With fees becoming so prevalent across our financial lives, we need to be aware of how and when we encounter them. This allows us to be vigilant and intentional to avoid fees whenever possible. While we understand that certain services and products have a cost, we don’t appreciate it when those fees are hidden until the last minute or when companies go about adding them in an underhanded way.
Fees suck, but sometimes they’re unavoidable. I don’t even like to pay for shipping these days. But if you look at the overall bottom-line cost, paying certain fees (every once in a while) might still score you the best overall price.
** Feature pic by Kenny Eliason on Unsplash
