5 of the Most Insulting Fees and How to Beat Them

By Stacy Johnson

NEW YORK (MoneyTalksNews) — You give me something I want, we agree on a price, I pay for it. It’s the way the world has worked for thousands of years. These days? Not so much.

Today, with an increasing number of businesses, it goes more like this: You provide something I want, we agree on a price, I pay, then you tack on fees to fatten your bottom line.

Unreasonable fees are more than just a drain on your finances. They’re insulting – the financial equivalent of a cold slap in the face. Check out this video for some examples, and to see how far I’ll go to illustrate a concept.

In no particular order, here are five of the world’s most insulting fees. They made my list for one of three reasons: They’re unreasonable, you’re getting little or nothing in return or they’re ridiculously overpriced.

Banks

1. Foreign transaction fees: This is a fee charged on credit card purchases processed outside the United States, such as when you use your card in Europe or to buy something from a non-U.S. company. Banks that charge them typically collect 3% of every transaction. The implication of this insulting fee is that it’s related to the intricacies of currency conversion. But lawsuits have revealed these fees are nearly pure profit: money for nothing.

Workaround: If there’s any chance you’ll be making purchases outside the United States, there are plenty of cards to choose from that don’t charge this fee.

2. Overdraft fees: If you overdraw your account and the bank uses its money to cover your negative balance, it deserves to be compensated. But how much? According to this article at CNBC, overdraft fees average from $30 to $34 nationwide. Charging $34 for a one-week loan on the average overdraft of $36 equates to an annual rate of 5,000%.

Workaround: Link your savings to your checking account for overdraft protection. This might result in a transfer fee, but it will be lower than an overdraft fee.

3. Checking, loan and other banking fees: Not paying interest on your checking account is bad enough. But now banks want you to pay – often upward of $100 a year – just to have an account. Want a paper statement? Not long ago that was your only choice. Now it will cost you. Why should you pay to use an ATM, even another bank’s? You’re saving the bank money, not costing them. When you use the automated checkout at the grocery, they don’t charge a fee. Banks shouldn’t either.

Workaround: There’s no reason to get slapped around by any bank. If you hate yours, ditch it. Credit unions typically charge lower interest on loans and credit cards, pay more interest on savings and have lower overall fees than banks. Think they don’t have enough branches? You’re probably wrong. Many credit unions belong to a shared branch network of nearly 5,000 locations that allows members of one credit union to conduct business at any other member credit union anywhere in the country – even overseas. And when it comes to finding the nearest participating credit union? Yes, there’s an app for that.

Hotels

4. Resort fees: The concept of paying to stay at a hotel, then paying more to use on-site amenities, is ridiculous. The FTC recently sent a warning letter to 22 hotels accusing them of potentially violating the law by bumping up the prices listed on their online reservation sites with hidden fees. From the press release ...

One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities or Internet access, sometimes referred to as “resort fees.” These mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions. The warning letters also state that consumers often did not know they would be required to pay resort fees in addition to the quoted hotel rate.

Workaround: Before you book a reservation, find out in advance what fees you’ll be expected to pay; if you hear something you don’t like, just say no. In 8 Tips to Save at Any Hotel – Even the Nation’s Trendiest, I suggested a tactic I’ve been using to get better hotel pricing for decades: negotiate. Explain that you’re a good customer, don’t find the fees fair and would like a lower price. Just make sure you’re talking to a front-desk decision-maker, not an 800-number.

5. Internet service: When the Internet and Wi-Fi were new, perhaps it was justifiable to charge a fee to access it. These days, charging for Internet access makes as much sense as charging for the in-room TV or air conditioning. $15 a day? Give me a break.

Workaround: If you can’t find a hotel with free Wi-Fi, ask to have the fee waived when you check in. If that’s not an option, find it free elsewhere – either in the lobby or a nearby hotspot. Free apps such as WeFi, available for iPhone and Android, will help you find one.

The bottom line

When I write articles such as this, it’s often tough to fill the list. But not with this article. I could have mentioned Ticketmaster, car dealers, gift cards, cellphone companies, schools and mutual funds, and lots more.

So what do you think? Am I being too hard on these businesses? What’s the most annoying fee you’ve paid? If these aren’t the ones, here are five more that might fit that bill.

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