It seems like pretty much everything comes with fees these days. Some of those fees we know about, and some we don’t.
That’s why checking your bank, credit card and other account information frequently is important. Not only does it help you spot potential fraud, but it can also help you identify unnecessary or hidden fees that you may not even realize you’re paying.
If you don’t pay attention to where your money is going, you’re very likely wasting a lot more of it than you think. And frankly, paying unnecessary fees is just frivolous: a bad habit you need to kick if you want to develop a successful, sustainable money routine.
13 Fees You Should Never Pay
Unfortunately, there are some fees we all just have to live with. But there are plenty of others that you can avoid. You just have to know what they are, how to opt out and where to find the free alternatives.
1. Credit Report Fees
With the passage of the 2003 Fair and Accurate Credit Transaction Act (FACTA), all Americans are entitled to one free credit report per year from each of the three major credit reporting agencies: Equifax, Experian and TransUnion. You can request yours from each bureau online, by phone or by mail.
The easiest way to access your free annual credit report is to visit AnnualCreditReport.com. This is the only site that’s truly free. You’ll need to provide your name, address, date of birth and Social Security number.
Editor’s note: Because of the economic impacts of the COVID-19 pandemic, credit reports are free to access once a week through the end of 2022.
2. ATM Fees
ATM fees are a huge price to pay for convenience. The average ATM fee for an out-of-network withdrawal was $4.66 as of 2022.
If your bank isn’t part of a nationwide ATM network, you should consider finding one that is. And that doesn’t always mean a “traditional” bank.
A couple of examples of financial services companies that have good ATM networks are USAA and Charles Schwab. Also, many of the credit unions that have large co-op networks offer free ATMs. Online banks and credit unions also refund some ATM charges per month.
This guide can help you find free ATMs before your next cash crunch.
3. Late Payment Fees
You’re typically charged a late fee any time you pay a bill after the due date. On top of that, making a late payment on a credit card, mortgage or another loan can also damage your credit score.
And it doesn’t matter if you’re three days late or 30 days late. Just one late payment could end up causing you financial damage for years because it shows current and potential lenders that you’re unreliable.
According to Credit Karma, here are a few consequences of paying a bill after the statement due date:
- You’ll usually be charged a late fee.
- Your interest rates may rise.
- It may end up on your credit report.
- It might decrease your credit score.
Ideally, you want to pay more than the minimum monthly payments on credit card debt. Since credit cards typically carry very high interest rates, the longer it takes you to pay them off, the more money it’ll cost you over time.
Look for a few expenses in your budget that you can cut or reduce, and then put that money toward your credit card debt every month.
If you can swing only the minimum payments right now, do absolutely everything you can to make those payments on time! Until you get your debt under control and paid off, you’ll never be able to get ahead financially.
4. Money Transfer Fees
There are tons of ways to transfer money, both domestically and overseas, for free. Here are some of your options:
- You can send money from your PayPal to another PayPal person by linking up bank accounts. This is significant because it allows you to send money overseas for free.
- Then there are also apps for smartphones that will let you send funds for free to another person:
So let’s say you’re at dinner and you want to split the bill. One person pays with a credit card or cash, but what do you do as the other party if you don’t have enough cash on hand to give them for your part of the bill?
That’s where something like Venmo or Cash App comes in handy. You can send money to anyone you want for free, simply using an email address or phone number.
However, money expert Clark Howard has a major warning about payment apps:
“Because there’s nothing in the law that recognizes a financial instrument like these [apps], the consumer bears all the risk of fraud,” says Clark. “It makes them very, very dangerous to use. Something that seems innocent enough can end up really ugly.”
Clark’s advice is to set up a separate checking account for payment app transactions so you have fewer funds to risk if something goes wrong.
5. Checking Account Fees
With more options available today, you can get a checking account that doesn’t require a minimum balance to avoid the fees.
So before you choose a new bank, make sure to do a little research on any and all fees associated with the account. To help you get started, here’s a list of the best fee-free checking accounts.
6. Foreign Transaction Fees
Before you travel outside the United States, make sure your credit card doesn’t charge foreign transaction fees, because they can really add up. Many credit card issuers charge 3% if you use their cards outside the U.S.
Using ATMs abroad is the most effective way to get money when traveling. But some banks will charge a foreign currency rip-off fee that can be as high as $9 or $10 per transaction!
If you’re with a big bank, check to see if it’s part of an alliance that lets you use ATMs in other countries without paying a fee.
7. Credit Card Interest
The average credit card interest rate is around 18%, according to CreditCards.com. But some cards can carry rates as high as 30%.
If you don’t pay your bill in full every month, interest charges can start to add up very quickly. And the longer that debt just sits there — continuing to add interest to the total principal you already owe — the more difficult it becomes to pay it off.
The goal with credit cards is to purchase only what you can afford to pay off in full every month because otherwise, you’ll end up wasting a lot of extra money on interest over time.
8. Overdraft Fees
Overdraft fees usually run $30-$35 per occurrence. And if you have a few more transactions go through after that first overdraft on your account, you can see that $30 fee turn into hundreds of dollars before you know it.
Tell your bank you want to opt out of overdraft fees. Then, if you try to make a purchase and there isn’t enough money in your account to cover it, the bank will just refuse the transaction.
9. Shipping Fees
If you shop a lot on Amazon, the price of an Amazon Prime membership may pay for itself in shipping costs over the course of a year.
There are also so many coupons and promo codes available these days for free shipping, so you should rarely have to pay for the cost to ship something you buy online.
10. Convenience Fees
It’s an increasingly rare occurrence, but there are still stores around that require a certain minimum purchase to use a credit card. If you don’t have one, you’re charged a fee.
Don’t pay it. The fee is probably greater than any rewards you’ll get from using the card, so it’s just wasted money. It’s always a good idea to keep some cash on hand, so you don’t get caught in a situation where you’re forced to waste money on a fee you don’t need to pay.
11. Checked Baggage Fees
When you’re shopping for a flight, make sure to include the added cost of checked baggage fees for airlines that charge them. While the price of one flight may be slightly more expensive than another, if that carrier doesn’t charge for baggage, you may actually save money by purchasing that flight. For example, Southwest Airlines allows you to check two bags for free.
12. Partial Payment Fees
When a company splits your annual bill into monthly installment payments, sometimes it will charge an added fee. So make sure to check the fine print of your bills, and if you have the money to pay the annual amount in full, it could save you money by avoiding those extra fees.
13. Unused Subscriptions
Maybe you signed up for an online streaming service or some other subscription that you forgot about — or even know about but never use.
That $3.99 monthly fee may not seem like a big deal, but if you’re paying several of them each month, they can add up to a lot of wasted money: money you could be using to pay off debt or to boost your savings.