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Don't give in to those hidden fees

Credit cards

TEXT OF COMMENTARY

Chris Farrell: I am not a fan of prepaid credit cards. Number one reason -- all those hidden fees.

Tess Vigeland: Our economics editor Chris Farrell.

Farrell: 'Course, when it comes to fees, the credit card companies are hardly alone. Lest you think we're talking small amounts of money, Kiplinger's personal finance magazine estimates we could save more than $5,000 a year if we only take the time to avoid fees.

But I think the loss is more than that, possibly much more. This is rip-off capitalism at work.

Now, some of the fees are like a slap in the face. I used to get annoyed at a $1 charge to use an out-of-network ATM. Now it's more like $3 to $5.

All too many of the fees are sneaky. Look at all the charges airlines impose on such things as checked baggage, a seat with extra legroom and early boarding. And have you ever looked at a car rental contract at an airport? Did you pay attention to the "concession recovery" fee? It typically runs about 11 to 13 percent of your rental. It's how the rental company pays the charge airports impose to do business there.

Mutual fund companies -- they've devised all kinds of charges. The worst may be the 12b-1 fee that pays for marketing expenses. There are also the various loads or fees many mutual fund companies charge to invest with a fund.

I could go on and on and on. But you get the point: we're being nickeled-and-dimed by fees.

But there's only so much you and I can do. We have other things to do with our time, like work and family. That's why these fees work -- companies know we're too busy to pay attention to small charges. And that's why government regulators need to step up the fight against rip-off capitalism.

For instance, thanks to legislation, 401(k) plans will have to make their fees and charges readily apparent to participants starting next July. Up until now, the information has been hard to find. There was minimal disclosure. Yet fees can make a huge difference to returns.

The federal government could take a pro-consumer stance by forcing the airlines to make the cost of their fees easily understood. It would make for better comparison-shopping online, a boon to flyers. The new Consumer Financial Protection Bureau must make fee disclosure a top priority.

Meanwhile, there's a note that should be taped on to the computer of the modern American consumer. "It's the fees, stupid."

Vigeland: Chris Farrell is the Marketplace economics editor. Express your fee outrage in the comments.

About the author

Chris Farrell is the economics editor of Marketplace Money.
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Last month my husband lost a single blank personal check at a store while paying for his items with cash. It's been decades since I've had to put a cautionary stop-payment on a check. My bank charged me $28 via their auto-teller system. A follow-up call to my branch revealed a low-down twist; that fee only rents the stop-payment for six months. If we wished to extend the stop-payment that would cost another $28 for each and every six month extension. Don't the check thieves know this?

With all due respect to the writers and researchers of this article, don't we all have a right, as citizens of these states that are united, to enter into any contract we wish?
If we enter into a contract with a private entity such as a credit card company, bank, mortgage company, or even an airline, it is our responsibility to make sure that we are not taken advantage of in some way. This is not the responsibility of the government. It is called personal responsibility and we should read the contract before we sign. We should not expect the government to protect us from ourselves. That is not the purpose of government in the united states.

Please ask Chris Farrell to check further into the fee issue. I have been told that the fee for service, at least at the airlines (bags, seat, etc.) is the fault of the federal tax structure. A hold-over from high fuel prices, the onerous fee business was not dropped after fuel prices returned to normal. Reason is that these fees are not subject to taxes. If this is also true of other business then "Big Business" is not the legitimate target for us poor slobs who pay. Further, there will be no reason for any fee structure to ever go away. They will evolve into ever more complex tangles.

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