Junk fees are a common source of frustration for consumers, and can add up quickly, resulting in people paying more than they originally intended.
According to a recent study, Americans are estimated to spend around $300 billion per year on these hidden fees. These fees can be found in a wide range of industries, including banking, telecommunications, travel, and retail.
One of the most common sources of junk fees is the banking industry. Banks often charge fees for things like overdrafts, ATM usage, and monthly account maintenance. These fees can add up quickly, and many consumers may not even be aware that they are being charged.
For example, according to a survey by Bankrate, the average overdraft fee in 2020 was $33.47. This may seem like a small amount, but it can quickly add up over time, especially for those who struggle with managing their finances.
Telecommunications companies are another industry where junk fees are common. For example, many cell phone plans charge fees for things like activation, early termination, and going over data limits. These fees can be particularly frustrating for consumers, as they may feel like they are being charged for things that they have no control over. A study by Consumer Reports found that the average cell phone customer pays around $84 per year in fees.
Travel is another industry where junk fees are prevalent. Airlines, for example, often charge fees for things like checked baggage, seat selection, and even printing out boarding passes at the airport. These fees can add up quickly, and many consumers may not realize that they are being charged until they receive their final bill. According to a study by Ideaworks, airlines around the world collected over $65 billion in ancillary fees in 2020.
Retail is yet another industry where junk fees are common. Some retailers charge fees for things like restocking, handling, and even gift wrapping. While these fees may seem small, they can add up quickly, especially during the holiday season. According to a survey by the National Retail Federation, the average person spent around $998 on holiday shopping in 2020, with around $189 of that going towards extra fees and charges.
As a result, the Biden-Harris Administration is announcing two actions that further advance the President’s agenda of promoting competition in the American economy.
The Consumer Financial Protection Bureau (CFPB) is proposing a rule that would slash excessive credit card late fees, pursuant to its authority under the bipartisan Credit CARD Act of 2009. The rule is projected to reduce typical late fees from roughly $30 to $8, saving consumers as much as $9 billion a year in late fees.
Also, the Department of Commerce’s National Telecommunications and Information Administration (NTIA) is assessing the barriers to competition in the current mobile app store ecosystem.
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