How Small Fees Add Up to Big Money

(2 of 7)

How Small Fees Add Up to Big Money

In the hustle and bustle of daily living, it is all too easy to let consumer and financial fees slip by. If you don’t pay attention, at the end of the year, you could have spent hundreds of dollars on consumer fees that you could have avoided and profitably used elsewhere in your budget. These fees include bank and credit union fees, payday or emergency loan fees, payroll card fees, rent-to-own fees, car buying and leasing fees, and other charges that tend to fly under the radar of many consumers.

How Common Fees Add Up, Sometimes without Being Noticed

It’s amazing how quickly some of these fees, which don’t seem to be so large in and of themselves, can add up. For instance, if you are late paying your credit card, have an overdraft on your checking account, and use an out-of-network ATM three times, you could easily incur more than $60 in one month in fees.

And because those fees are automatically deducted from your bank account or added to your credit card bill, they can fly under your radar, and result in other fees. For example, if you bounce a check or a debit payment, that fee is deducted from your bank account and could result in a second bounced payment.

Just think about how much those types of fees, and other fees, can cost you over the course of a year. If you had two late credit card payments and three bounced checks, took out a payday loan, and used an out-of-network ATM once a month, your yearly fee payments could add up to $290 in the course of that year.

Fees Are Usually Hidden

These fees are pretty sneaky because in many cases, you aren’t aware that they are being charged. If you are notified, you might be in a hurry, or it is something that has already happened that you can’t change.

For example, if you are out of town and need cash in a hurry, you might have to go to an out-of-network ATM for cash. The ATM will tell you there is a fee, but if you have to have the cash to pay for something, there isn’t much you can do about it.

Or, if you bounce a debit payment or check, those funds will automatically be deducted from your checking account. At most banks or credit unions, you will have the option to sign up for overdraft protection and will be told what the bounced payment fee will be when you open an account, but it’s easy to lose track of those fees and bounce payments if you aren’t balancing your checkbook regularly or if you don’t follow a budget.

Becoming More Aware of Fees

One of the best ways to become aware of fees is to pay attention to the paperwork that you get from your bank, credit union, credit card, the provider of your payroll card if you get paid with one of those, other lenders, and other companies that you do business with. For example, when you open a bank account, you receive a lot of paperwork, and that information usually contains a list of fees. If you don’t have a list of those fees, call the bank and ask a customer service representative about the fees that that bank charges.

You can do the same thing with other companies that you do business with. Also, whenever you open a new account or take out a new loan, make sure to ask about any fees involved. Then, think about whether the fee is worth the new card, loan, or other product.