What Are Junk Fees?

Junk fees are charges that service providers or financial institutions add onto transactions at the last minute. These fees are often viewed by the public as unnecessarily high, unexpected, and without solid justification. Essentially, if a charge adds little value to a transaction and was not disclosed beforehand, it may be considered a junk fee.

Where Might You Encounter Junk Fees?

Junk fees can be found in various sectors, including:

• Travel Costs: Extra charges for seating arrangements or resort fees for amenities like Wi-Fi and gym access.
• Concert Tickets: Exorbitant processing fees.
• Hospitals: Surprise fees for essential services.
• Banking: Overdraft fees, especially for minimal overdrafts.
• Mortgages: Unexpected fees during mortgage closing or higher-than-stated late fees.
• Rentals: Excessive late fees, processing fees, and insurance fees.
• Payday Loans and Auto Title Loans: Fees for retrieving personal property from repossessed vehicles.

How Can You Avoid Junk Fees?

While junk fees can be discouraging, there are strategies to avoid or minimize them:

• Remain Vigilant: Before signing contracts or making purchases, read the fine print and scrutinize what you’re being charged for.
• Check Receipts: After completing a purchase, review receipts and itemized bills to catch any unfair fees.
• Address Complaints: If you encounter an unfair fee, contact customer service to explain why you believe it is unjustified. Escalate the issue if necessary.

What’s Being Done About Junk Fees?

The federal government has been actively working to reduce junk fees. The Consumer Financial Protection Bureau (CFPB) is leading an initiative to eliminate exploitative fees. The U.S. Department of Transportation (DOT) has proposed measures to end extra costs for family seating on flights and has introduced a fee-free family seating dashboard.

The U.S. Department of Housing and Urban Development has also urged landlords and local governments to adopt policies limiting junk fees in rental housing. These efforts are starting to yield results, with some banks eliminating or modifying overdraft fees.

The Bottom Line

Being vigilant about junk fees is part of maintaining good financial habits. Budget carefully, monitor your credit, and always review what you’re paying for. If you encounter junk fees, protest them vigorously.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. Our team is dedicated to providing transparent and fair mortgage solutions without hidden fees.