The cost of hidden fees
A sign reading "Don't get stung by fees" hangs in an Australian bank window.
TEXT OF INTERVIEW
Tess Vigeland: Here's something else to cause remorse in our financial lives: All those hidden fees we pay day in and day out on our credit cards, our bank accounts, and so on and on. Bob Sullivan is a consumer reporter for MSNBC. And he spent the last two weeks crisscrossing the country asking Americans what they think off all those fees.
Bob Sullivan: I stopped in Pittsburgh on my first night, like any good journalist, and stopped into a pub. And that particular day was the day that the amendment about interchange fees had just passed in the Senate. Those are the fees that merchants pay when they swipe your credit card. And I had a long conversation with the fellow who owned the bar about what it's like when someone walks in there and doesn't want to keep an open tab. And so, somebody buys six $2.50 and he ends up sending $5 towards the credit card company. So it's a lot of money.
Vigeland: Five dollars?
Sullivan: It all adds up. And those issues are very, very important to small companies, and in turn to consumers.
Vigeland: Did you find any differences in how people either thought about fees or didn't think about fees, depending where you were?
Sullivan: You know, I sure did. People in the middle of the country, they're slower to get caught up on things. They're slower to feel like they need the latest iPhone. They're slower to feel like they have to have the highest bandwidth on their cable modem service. And as a result, I think that they fall for things less. It's harder to tempt them and get them signing up for services that are going to charge them extra. So that's one thing that's certainly in their benefit.
On the other hand, I found out from folks in Minnesota, that there is this cultural politeness that makes them an awful lot less likely to get into confrontations with companies. So once they've signed up and they get mistreated, some of them aren't as aggressive as they should be at getting refunds.
Vigeland: What was the most interesting story that you got out of your trip?
Sullivan: This heartbreaking story in Chicago, where I met a Catholic high school teacher. Obviously, he doesn't get paid a lot of money. And over the last five years, he's slowly dug himself a credit card hole and ended up with about $35,000 in credit card debt, and he followed one of those debt settlement ads. And the terms of those debt settlement deals are just terrible. He, essentially, was told not to pay his debtors any more, and instead to pay into this separate account, where he was going to build up money that could be used to negotiate debts later. But unfortunately, of his $35,000 in debt, the company he worked with -- they wanted to collect $5,000 in a fee and they wanted it first. So he made about 11 payments to this company and almost all of the money he paid went to his fees. So a year later, he's out another $5,000 -- $35,000 in debt turned into $60,000 in debt because he tried to get help.
Vigeland: You already knew a whole lot about the fees in our society. What did you learn that perhaps the rest of us can take away?
Sullivan: Because the economy's in the state that it's in, so many folks are unemployed or they're just hanging on to their employment. They're vulnerable, and people are falling for things they never would have fallen for before. People are buying extending warranties, because they have old cars and they're scared about it. People are settling debts and falling for late-night TV ads they probably wouldn't be up watching, except they're unemployed and they're so nervous at night. So more than anything, I think the economic environment has just created the perfect storm for people who are victims of these crimes. And it's created immense opportunities for the scammers.
Vigeland: Any fees that you ended up paying on the trip that you perhaps weren't expecting?
Sullivan: Well, I went with my dog, Lucky, he's a golden retriever, and is just the world's best ice breaker. He's a big clown of a guy. Everyone loves him. And honestly, most people don't remember me from my visits. They remember Lucky, and I'm fine with that. In Pittsburgh, the first hotel I called, itwas going to be $99 for me, and $90 extra for Lucky. For one night!
Sullivan: I'm like, he doesn't even need an extra towel or bed or anything. But the next hotel I called -- which admittedly was 10 minutes outside of town, a little less convenient -- but it was $60 for the both of us. And particularly when you're traveling with a dog, if you show up at a hotel at 10:30 at night, you don't have a lot of options if it turns out they want to charge you a lot extra for a pet. So it's very, very important to be deliberate, call ahead and make sure you know what you're going into.
Vigeland: Maybe Lucky just needs a job so he can pay his own way.
Sullivan: You know, I would come back to the hotel and he would never have written a story, even written a cutline for a photo.
Vigeland: Oh geez. Bob Sullivan covers Internet scams and consumer fraud for MSNBC.com. Bob, thanks for sharing your "what-I-did-on-my-summer-road-trip" story with us.
Sullivan: You're very welcome, and happy fee-free vacations to all your listeners.