Recently the Federal Trade Commission (FTC) announced a proposed rule that would require companies to list upfront any junk fees associated with their offerings. The goal would be to prevent ticketing companies, hotels, and car or apartment rental companies from surprising consumers with unexpected charges. Like other FTC mandates, this isn’t like flipping a switch – it may take months to see any changes. In the meantime, what can you as a consumer do to manage junk fees?
What is a junk fee?
It’s so frustrating when you are about to make a purchase and realize that the price you thought you were going to pay is going to be tens or even hundreds of dollars more. These unexpected fees lurking in the fine print are what most people refer to as junk fees. Usually there’s no real justification for the fee – it’s just another way for the company to make money off you.
Industries that have embraced junk fees
Sometimes the biggest hassle with junk fees is the surprise element. You’ve think you found a great deal, then at the end you discover the deal isn’t so great after all. Knowing the industries that rely on junk fees can help you to manage your expectations.
Airlines. With some airlines or at certain ticket levels, you have to pay extra for your seat. If you want a window seat, you either can’t choose it or you have to pay for that seat assignment. Most people know this when researching airfares, so they aren’t surprised when they reach the checkout screen.
Ticket outlets. After some of the large-audience concerts that hit the US over the summer, news reporters and consumer advocates have been vocal about the add-on fees for purchasing tickets online. These may add up to 20% or more of the initial price, which can be astronomical when you’re paying $500 for a concert seat.
Hotels. Hotels love to hide resort fees. Sometimes these can actually be for resort items, such as a fee for a beach chair and umbrella or other add-on items. But often, hotels are charging extra for what should be included in the room (such as internet service, cleaning, or a roll-away bed).
Rental homes. This one shocked me recently when I started looking at rental homes in the area. My city has seen companies buying properties, supposedly repairing them, then offering them for rent. This wouldn’t be bad, except that many of them require you to pay a smart-home fee, for quarterly replacement of HVAC filters, or for monthly pet rent on top of the deposit you already made.
Banks and credit cards. Whether it’s an annual fee, late payment fees, or foreign transaction fees, these charges can quickly add up. Given the level of competition, no one should be paying to bank or use a credit card that they pay in full.
Estimate the average junk fee
One method I use when I’m researching prices in an industry that relies on junk fees is to estimate an average fee. For instance, with rental houses, I pulled the fee information for two of the largest rental companies in my area, then totaled the fees for each one. Now when I’m looking at rentals, I mentally add in the highest fee total to the listed rent to determine if the house is worth further investigation. It doesn’t remove the fee, but it helps me mentally prepare for the final tally.
Comparison shop
In most instances, there are options available that don’t charge fees for their service or product. For instance, with rental homes, there are still individually-owned homes that have an application fee, require a security deposit, and simply charge a monthly rent. They are more difficult to find, but given the hundreds of dollars of add-ons charged by corporate owners, it’s worth the legwork to save thousands of dollars.
Decide on a price
In searching for a rental home, my wife and I have set a price that we will not go above; if we chose to go above that price it would be more cost-effective to simply purchase a home. When we’re browsing through rental websites, we simply set the maximum price at a level below our actual maximum to account for all for the junk fees.
If you’re surprised while shopping
Unfortunately, more and more companies are adding on fees for what was once considered part of the purchase. If you find yourself at checkout and suddenly see these fees, take a moment to reevaluate. These companies realize you’ve invested time and are emotionally connected to the purchase; that’s why they sneak them in at the end. Ask yourself some questions:
- Do I really need this product?
- Do I need this product now?
- Are there competing firms that won’t charge these fees?
- Is there a less-expensive alternative that will still fit within my budget after fees are added on?
Ask for the fee to be removed
If you find the perfect hotel within walking distance to the amusement park but they have fees you don’t want to pay, call and see if the hotel will remove them. If you’re staying several nights, perhaps you can agree to have housekeeping only once if they don’t charge extra. Also consider joining any points club the hotel has to see if they waive some of the junk fees for members.
Make sure to read the fine print
Junk fees often hide in the terms and conditions of contracts and agreements. Read through them carefully to identify both hidden junk fees that will be imposed but also any fee or charge that could be added to your bill (for instance, if you leave your car in the hotel parking lot for the whole day while enjoying the amusement park).
Double-check your credit card bill
When you receive your credit card bill for the trip or item in question, make sure the amount charged isn’t higher than what you agreed to or what you expected. If it is, contact the merchant immediately.
Hopefully the planned FTC action will remove many junk fees, and help persuade those in other industries to offer upfront pricing. However, it doesn’t hurt to develop a plan to make sure you are charged fairly for all of your purchases. Know the industries that charge junk fees, and watch for fees when you agree to a purchase. Closely check your receipt and credit card bill after you’ve bought the item to ensure no superfluous fees were added. These simple steps will go a long way to helping you manage junk fees.
Photo by Erik McLean