When you take out a loan, the very first thing you shop for is a low interest rate. When you purchase a stock or a mutual fund, you look at returns. When you buy a life insurance policy, you want to know about the payoff. What you might not think about right away are fees.
Like insects swarming over a picnic table, fees that come with many financial products seem small and annoying. But they carry a real sting. Consumer Reports estimates that U.S. consumers collectively pay at least $216 billion in financial fees each year.
For individual consumers, fees can be needlessly onerous: They can drive you deeper into debt, drag down an otherwise profitable investment, and lock you into an insurance policy or a mortgage that ultimately makes no sense. Some fees are no-see-ums, embedded in fine print or collected so seamlessly that consumers don’t realize that they’ve paid until long after the fact. If you recently experienced a financial services fee that was surprising, outrageous, or unfair, tell us about it.
In recent years financial services companies have imposed sizable increases in standard fees and added new charges to their ranks. Many fees pass along legitimate service costs, such as those for mailing statements or accounting. But others are marked up to an indefensible level, like the $35 one bank is charging people who deposit a bad check. Typical cost for banks: less than $1.
To survive and prosper, every consumer should know where the fees are and how much they cost. What follows is an examination of seven financial product areas to alert you to fees, both new and old. Throughout, we highlight fees that are particularly audacious. Finally, where possible, we provide you with strategies for avoiding or reducing their bite.