‘Junk fees’ cost Americans almost $65 billion each year
Americans lose $12 billion every year to credit card late fees
(InvestigateTV) — The White House reports that Americans spend about $65 billion per year on “junk fees,” otherwise known as surprise charges like late or overdraft fees.
The Biden administration and the Consumer Financial Protection Bureau (CFPB) defines junk fees as annoying add-ons that are not proportional to the value you receive.
Ted Rossman, a senior industry analyst with Bankrate.com, said one example of this disproportionate penalty is late fees on credit cards, which can be up to $30 for a first time offense.
“The CFPB says that’s far too high, it’s become a profit center,” Rossman explained. “It’s way exceeding what the card company needs to charge in their view. So, they’re trying to bring it down to $8.”
Rossman said while reducing these fees will lead to greater transparency, it’s unlikely consumers will save money.
“We’re actually already seeing that with things like concert tickets and sports tickets,” he said. “There was recently an event at the White House where the leaders of companies like Live Nation and Ticketmaster and SeatGeek pledged a lot more transparency. So basically, offering all in pricing from the get-go rather than these surprise add-ons at the end.”
Rossman said you may end up paying the same, but at least you know what you’re getting into.
At the direction of the White House, the CFPB launched an initiative in February to start combating excessive credit card late fees.
Rossman said you should start seeing more transparency with things like concert or sports tickets, as well as short-term home rentals soon.
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