By now, most of us are much more aware of many of the hidden fees and taxes that we are paying as Americans, so I guess that they are no longer “hidden.” Nevertheless, they seem to be increasing in both number and amount.
Hidden taxes are everywhere. It is how local, state and federal governments increase revenue without “raising our taxes” — the ones we focus the most on, income, real estate and sales taxes. According to informationststion.org, we pay 12 percent on average in monthly cable taxes, and about the same amount in cell phone taxes. Then there are those “sin taxes,” like tobacco and alcohol taxes. We have discussed tobacco taxes in past columns.They are the primary reason that a pack of cigarettes in New York state is in the $8 to $10 range, and even higher in New York City, where $13 is about right. Again, according to informationstation.org, depending upon the quality of the spirits you buy, and what state you buy them in, you can pay up to 33 percent in taxes. Lastly, there are those gasoline taxes, where we know that New York once again leads the way.
You can avoid some “hidden taxes,” like the sin and cable taxes, but some other taxes, like taxes on your utilities, you really can’t avoid.
It is the same with the many “hidden fees” that we are also learning more about every day. Some can be avoided or minimized; others, perhaps, not so much in today’s society. The most recent information I looked at, which was for 2015, indicated that add-on hotel and resort fees were over $2 billion annually, service fees charged by the ticketing industry were over $`1.6 billion, and baggage and change ticket fees charged by the airline industry were over $22 billion. Then there are those “dealer overhead” fees, like floor-plan, documentation and dealer –preparation fees, waiting for you when you go to buy that next automobile. That’s not even going down the rabbit hole of those add-on cable and cellphone fees, which are cleverly maligned by those mocking television commercials. My favorite is the babysitter commercial, where her price has been increased by pizza ordering, dog sitting and rummaging through the closets fees.
That being said, there is one category of fees that more Americans might be able to avoid or minimize. Those are certain bank fees, like overdraft and ATM fees, that are growing, but which you have some control over.
It may be more difficult, depending upon your financial circumstances, to avoid some other transaction fees, like minimum balance fees, annual fees, inactivity fees and more. In those cases, you need to look carefully at your statements to see what fees you are paying, and then consider things like sitting down with a credit union representative to see whether, if you move your accounts, you could avoid or minimize some of them, like monthly fees or balance requirements on accounts. My wife, Judith, just did that. Then, you can always ask the financial institution to waive some of the fees, which they might do, especially if you increase your “number of products relationship” with them.
It might seem “insensitive” to some to say that you should never have to pay an overdraft fee for a checking account, or on a credit card or debit card account, but really? When it comes to debit and credit cards, as we have discussed, why not just make it clear when you open the account that you do NOT want overdraft protection. Then stay on top of what your balance is in the account that your debit card is tied into, and the available credit on your credit card account, and keep those cards in your pocket when you might get anywhere near causing an overdraft.
When it comes to a checking account, you can tie it to a savings account, if, for some reason, you think that someday you may have to write a check for more than what is in your account. That way you could avoid an average checking account overdraft fee, which, according to bankrate.com, was over $33 in 2016, and perhaps pay only a $5 fee. Of course you need to balance your checking account every month, and always fill out your ledger when you write a check. That seems obvious, but …
Also, I advise against playing any timing of deposits or payments games, which might backfire and cause an overdraft.
When it comes to ATM fees for using an ATM machine outside you institution’s network (its own locations and possibly some reciprocal institutions that you should be aware of), the average fee was over $4.50 in 2016, again, according to bankrate.com. By the way, there is actually no legal limit on those withdrawal fees, so in theory, you could be charged a $20 fee to withdraw $20 of your own money. So, please, either get an account with no ATM fees, ever, or use the ATM machine in your own bank or a reciprocal one.
Next time: Why do some prospective employers check credit, a story about saving money by eating out less often, and some more advice about avoiding identity theft.
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo or at http://www.monroecopost.com/search?text=Ninfo