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The Washington Post has a story about the proliferation of extra fees tacked on to just about every product or service under the sun. A couple of good insights make it worth the read.
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I had a conference in Vancouver in October. When I flew into Vancouver's airport I found out, much to my surprise, that I would have to pay 15 Canadian dollars just to leave the place (this fee not being included in my ticket). The airport authority called it an "Airport Improvement Tax". My only thought was, "I don't care what this airport looks like, I'm only going to be here a couple of hours".
Patriotism is the opium of the masses
My boss gets lots of complaints because we pass the 3% credit card charge on directly. Like somehow people who pay with cash or check should subsidize the credit industry.
I hate that sort of thing. It first really hit me when I got an unexpected $1 fee for using an ATM. Not the fee from the ATM's owner--a fee from MY OWN BANK for not using a preferred ATM network! After that I just came unglued (switched banks too).
In the end, I think it's all just part of the game. Most people are so jaded about "the value of service" anymore that the only way to sell something is with the lowest price. A lot of these fees serve no other function than to allow the price to represent the real value of whatever it is you're paying for. No longer do we live in an age where many aspects of the transaction are rolled into an "overhead account". Everything seems to be billed in excruciating detail!
While it largely makes sense, I long for the days when bills were simpler.
I think Mauve has the most RAM. --PHB (Dilbert Comic)
- extra local taxes
- the hard-sell "collision damage waiver,"
- the charge for an extra driver
- the ever-popular "refueling charge" should you not fill up the tank.
- At the San Francisco airport a $12 surcharge helps pay for the car-rental shuttle bus
- a state-mandated $10 at Boston's Logan Airport helps fund the city's new convention center
- last month, also in Boston, Dollar Rent a Car slapped on a $1.84 daily "peak-season" fee
I am renting a car in the near future, where they also threw on a "Premium Station Surcharge" for picking the car up from the airport instead of a local station. That comes to around 20USD. Plus, often, you have limited kilometres, so you had better count on adding on a few dollars if you go too far....Rented a Chevy cavalier for two days from LaGuadia (LGA), it was like 78/day with the insane taxes (yeah, really, for a cavalier - but I *had* to, so alright, I will part the 155 dollars).
When I returned it, they charged me 110 dollar *per*day* of "under age fee" because I am under 25. AND they taxed the fscking fee (at the same 17-18% rate which I have no idea where comes from)! is that funny, eh? considering in CA AVIS charges like 10-15 dollars for the same underage deal, I can just smell "bullshit."
If I didn't check the reciept, they'd probabbly just let it slip (I think if you don't file a complaint right away or some such, you waive your rights after a certain time). Eventually it got sorted out and such, but still it took a several phone calls, placed on hold, explanations, transfered, re-explanations, the whole works.
Point is, be careful out there, guys (and gals) - companies will rape you when they have the chance, so check your bills and add things up. And yeah - renting from AVIS in LGA is not a good idea.
My life in the land of the rising sun.
Long story but a valuable note at the end for some...
I got my first credit card so I could get an Internet account. The interest on it was outrageous so I paid it off monthly.
This went on for years until one morning I discovered my car had been stolen. Fearing that there might have been some old mail in the glove compartment, I got all of my cards(including other cards at better interest rates) cancelled, reported as stolen, and reissued with a different number.
While calling people who charged my first credit card monthly(three accounts and a few online services) I accidentally gave them the number of one of my newer cards. I didn't bother making the necessary corrections because it didn't matter to me.
A week later, the issuer of the first card sent a replacement but left the expiration date the same which was two months away. I put it away and ignored it.
The date of expiration on the card came and went and I got nothing. Not having any outstanding balance and not receiving any mention from the issuer I assumed they had dropped me.
Two years later, I get a monthly statement from these guys. Surprised, I look at it and it's several dollars for maintenance. It seems that they assumed I still had a valid card and since I did not use it they were going to charge me for the honor of not using it(a new policy it seems).
Politely, I explained that they never issued me an updated card, their interest rates were too high, they could cancel my card, and I wasn't paying the fee. Worked like a charm.
On a side note: for the few who read this, it *really* pays to call your credit card issuer, act dumb, and ask them why their interest rates are so high(even if they aren't).
Tell them about all the mail you get about other issuers promising lower interest rates(you get those all the time, remember those numbers).
Tell them about how those cards are offering to transfer your balance for *free*.
Explain that you like to do business with them but those offers are tempting and, "Is there anything you can do?"
Although I have relatively good credit(I think) I have heard from others that this will work even if you are really bad. The worse thing that can happen is they say no and you can brush it off with an "OK, just checking" attitude.
Try it. It *REALLY* works!
*Cough* I live in New Hampshire, you insensitive clod!
I spent a year in Iraq looking for WMD and all I found was this lousy sig.
Yet, do they charge less for customers who use less than average? I think not.
Sprint decided to charge some of its PCS wireless customers -- primarily those with poor credit ratings who were on a special price plan -- $3 when they wanted to speak to a customer-service representative.
The less money you have, the more expensive everything is for you. The more expensive everything is for you, the less money you have. Now even insurance companies charge you more if you have less-than-perfect credit. Cell phone companies charge you more. Land utility companies charge you more. I've even seen surcharges on Apartments, Hotels, and Rental Cars for less-than-perfect credit.
a state-mandated $10 at Boston's Logan Airport helps fund the city's new convention center
This is a privately levied tax! Amazing! Basically, a for-profit piublicly run private venture (convention centers are all for-profit, and have nothing to do with the public good, hence they are private) taxing people who don't even have the right to vote in that area.
Dollar Rent a Car slapped on a $1.84 daily "peak-season" fee -- "leaf-peeping season," you know.
Why don't they use their GPS tracking to detect when renters drive the cars on popular leaf-peeping routes and charge the fee that way? It'd be like being able to put a private virtual toll anywhere! They already do this to detect when customers leave the "allowed" area, and charge them heftily if they do...
Meanwhile, for the privilege of paying a credit card bill over the phone, Citigroup charges $9.95.
How can it possibly be legal to charge someone for paying their debt to you?! Oh wait, it's free if they mail in a check, so the creditor can hold onto it until it's late, then charge more fees... You're basically paying for the proof that you paid on time.
It has launched a preferred-guest program that,.... to any customer who signs up. And the cost of signing up is also free....
customers who sign up for this preferred service tend to spend 25 percent more than the average guest
Doesn't sound very "free" does it?
How do they do it?
There is software out there called "Customer Relationship Management" (CRM) software that many banks, insurers, and utility companies are using to target fees and customer services. There are several ways this is accomplished using the profitability score, the risk score, and the opportunity score:
1) When you call customer service, you punch in your account number. The computer looks your account up and if you're a "good" customer (i.e. profitable), you get bumped to the head of the queue. If not, you wait.. and wait.... and wait..
2) The computer periodically measures the profitability of your account. If you are a very profitable customer, it may reduce or relax fees on your accounts.
3) If you start to pile up money in your bank account, the computer will sell your personal information to places like mortgage lenders, car lenders, and other high-dollar financing brokers to start trying to separate you from that money.
4) If your average balances start to decline, down go your scores and up go your fees!
5) Use all of your cell phone minutes every month without going over, and all three of your scores drop and you'll never get decent customer service. Some cell phone companies are even working on technology that will decrease the likelihood of your call being dropped depending on your profitability score; when there is contention between customers on a crowded cell. Say there is a full cell, and a highly-profitable customer drives into it - the software will determine which unprofitable customers can be dropped so that the profitable customer doesn't get dropped.
6) If a bank is taken over, this software determines which accounts the suitor keeps, and which ones are sold off to other subprime banks (probably with higher fees).
7) Pay off that credit card balance every month, and you'll start to see your interest rate drop gradually in order to encourage you to carry a balance (I know for a fact Capital One does this. I have a card and for every month I pay my balance in full, my daily rate drops by a few ten-thousandths of a percent). Conversesly, you may also see 'participation' fees levied against you if you don't ever pay interest.
8) You may also see 'participation' fees if you don't use your card for a number of consecutive billing cycles.
9) Call customer service frequently? Maybe you better think twice about that
10) Paying $4 to use a teller at your bank? Profitable customers don't have to. (i.e. you have your mortgage with them)
Exercise some critical thinking skills and I'm sure you can see where people you do business with will look for opportunities to measure your profitability. Once you can see where they are trying to manipulate you, you can turn it around and begin to manipulate the system in your favor.
- never charged a monthly fee for any account
- provided me with a free supply of printed checks
- called me (years ago) when the interest rates on money markets became higher than those in my savings account just to ask would it be ok if they transfered part of my savings to a money market account?
- provided an ATM card with 16 free uses per month (half for merchants / half for cash withdrawal)
- provided a list of credit unions in my area which have no-service-charge ATMs (there are no local branches of my Credit Union)
- provided free on-line banking which gets better each year
- introduced their on-line bill paying service with two free years of use, then, after charging for it for a year, they reduced the monthly fee.
Maybe not all of them are as good as this one, but they do generally behave as though service to members is important. There is an alternative to fee happy banks and you should seek them out.Indeed.
Today I bought a 25$ ticket from ticketmaster--$6.50 "convenience fee", $4 handling fee, $1.50 shipping charge.
Which would be reasonable except that delivery consisted of generating a pdf for me to download and print.
"Homeowners look at interest rates and points, but they don't spend a lot of time comparing other fees that make up the closing costs -- even though a lot of money is on the table."
Points have always pissed me off. Points are extortion charged by the lender to convince them to make you a loan - even if you have good credit. Another little advantage to this scheme is that they are the equivalent of interest charged up front. Each point is equal to 1/8 of a percent of interest on the loan amount, and it's paid up front.
The real trick is that it's the equivalent of that interest rate charged over the life of the loan. This would be fine if you kept the loan over the full 30 year (or whatever) term. However, based on turnover and people selling, moving, etc., the average loan is only kept for 7 years. Therefore the effective interest rate increase can be many times higher.
Considering the cost of homes and the amount loaned, this can be many thousands of dollars that you get screwed out of.
Bottom line: unless you're going to keep the loan over it's full term, never pay points. It's just not worth it. Take a slightly higher interest rate up front. Of course, YMMV so check it out and do some math based on the how long you expect be in that particular home and loan.
Another one is "document prep fees" when buying a car. This one is for filling out the form and processing the title at the MVD/DMV. This can run into the hundreds of dollars and it represents a few minutes writing your name and address on a form and writing a check to your local MVD/DMV office. Sure you might wait in line a while, but the folks there generally try to be helpful and can certainly tell you what you need to get titled and licensed. Is $300 - 400 worth eliminating the (maybe) frustration of that process? Personally, I'd ask for the MSO (Manufacteror's Statement of Origin) and do my own title work (with the help of the MVD/DMV clerk if necessary.)
War is Peace. Freedom is Slavery. Ignorance is Strength. - George Orwell or George Bush?
Has this thing called a "number portability surcharge." I called once to ask what it was. Basically, it allows me to keep my phone number if I switch to another phone company. This is a land-line, mind you, and gee, our small town has a monopoly phone company! Who am I going to switch to?
This stuff makes me want to start a competitor just for spite.
You know, it always somehow made sense to me that ticket master could charge a convenience fee for tickets. The idea was that they had to charge a small enough amount that you didn't decide that it was too much and just go over to the actual box office and buy it without the service charge. However, the amount they charge these days is f'ing ridiculous.
I wanted to go to a show recently where the venue is 200 yards from my house. I figured, ha! here's a chance to actually go to the box office and avoid the surcharge! It turns out that they have closed their box office, because no one was using it, you can only buy tickets through ticketmaster/bass or whatever. And the fee is like 35% of the cost of the ticket! When there was actually an alternative I would blissfully accept Tm's business model (and bend over), but now that there isn't an alternative at all. Anyone else have this happen (ie. tried to buy from a box office, when there no longer was one)? Alternatively, anyone ever get charged by ticketmaster when buying the ticket AT THE BOX OFFICE?