Consumers hate pesky service fees, so why not get rid of them?
Financial consumers in the US don’t like nasty service fees: think bank check fees, annual credit card fees, or Airbnb maintenance fees, among many other fees and charges.
You can’t blame them. Having to pay extra for a service that may not be held in the highest regard is no fun. Worse yet, paying fees can really put a dent in your wallet if you leave them alone.
DON’T MISS: Bank fees keep digging into consumers’ pockets
While Americans have a good idea of which money rates they dislike the most, which rates are actually the worst of the worst in the eyes of financial experts?
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The worst consumer rates
These service fees are the “worst” on that uploaded list.
Overpay for credit. When it comes to consumer fees, there are the major leagues and the minor leagues.
Make no mistake, overpaying interest on debt, especially on big-ticket items like credit cards, mortgages, and cars, can be the worst consumer fee of all.
“Don’t pay with anything on a credit card or buy now pay later (BNPL) loans unless you absolutely have to, especially if you’re not paying off balances in full each month,” said Brightside’s director of financial solutions, Sophi Raseman. “If spending control is your problem, don’t open any new cards and freeze the old ones in a block of ice.”
Also, don’t let any lender talk you into a longer loan schedule.
“It may seem like that will ease the burden of having a higher monthly payment,” Raseman said. “This is one of the ways that consumers are tempted to shell out as much interest rate as possible to their lenders, and it’s particularly common with auto loans.”
Late fees because you took care of life. An industry insider once told Raseman a term credit card experts use to refer to financially secure people who can pay off their credit cards, but pay interest and fees because they forget to pay on time.
“They call these people ‘sloppy revolvers,’” Raseman noted. “Don’t be fooled by credit card companies or other billers. If you have room in your cash flow to do so without risking overdrafts, insufficient funds, or other non-payment fees, set up automatic recurring bill payment for your important bills.”
Long-term financial investment commissions. Watching your 401k go under in 2022 was bad enough to worry about retirement planning fees.
“Fees for 401k plans are typically some of the highest because there are typically money manager fees, along with trading charges and administrative fees,” said Statewide Financial Group President Stuart Boxenbaum. “When you’re contributing to a 401k, always know what you’re paying for, but also understand where your money is invested.”
Variable annuity fees are just as bad, if not worse, than 401k plan fees.
“Not only is the cost of variable annuities higher than most investments on the market, but your money is also tied up longer because it’s still an annuity,” Boxenbaum said. “Variable annuities also carry significant market risk, even if you pay more than necessary in fees.”
Fixed indexed annuities are generally much more cost-effective than variable annuities, especially when you can buy them and only pay for what you need.
“Typical fees for a fixed indexed annuity can range from 1 to 1.5% per year, which is considerably less, on average, compared to a 401(k) or variable annuity,” Boxenbaum added.
Hedge Fund Fees. There’s no question that hedge fund fees are outrageous, even when the country club set doesn’t seem to care.
“With hedge funds, the typical “2 and 20” fee structure means you pay 2% to let the fund managers keep your money and 20% of the profits if they actually do their job.” said the founder and former MD Financial Skills salesperson. banking specialist Michael Diamond. “Invest in an index fund, pay next to nothing, keep all your earnings, and turn country clubs into public parks.”
Domestic consumer service rates. Just having a bank account and owning a mobile phone, among other conveniences, can add hundreds of dollars to a family budget.
These consumer service fees are among the worst, Billsmart CEO Mark Chen said.
— Bank Overdraft Fees. Sign in to your account or call your bank to turn off overdraft fee protection. “Now if you charge more to your card than you have on your account, the charge will bounce instead of going through,” Chen said.
— Telephone company administrative fees. You can’t eliminate these fees, but you can reduce what you’re paying on your phone bill.
“Negotiate or have someone negotiate for a lower rate to save $15 to $50 a month on your bill,” Chen advised.
— Rideshare price increase rates. Check all the ride sharing apps in your city and consider using a taxi or public transportation
— ATM fees. Withdraw money from network ATMs or make larger but smaller withdrawals.
“You can also sign up for cards like the Charles Schwab Debit Card that fully reimburses ATM fees,” Chen said.
— Late fees. You can get most late fees reimbursed.
“Most of the time you just need to talk to your bank or phone or cable company and they will refund your first late fees as a courtesy to you as a customer,” Chen added.