Airlines, Banks, and Credit Cards: The ABCs of Hidden Fees

Fees are an unfortunate reality of being a 21^st century consumer. But most extras and surcharges are prominently disclosed, giving you the opportunity to avoid them.

Unless they’re hidden, of course. Some businesses depend not just on fees, but on concealed fees, to turn a profit. That’s unethical — and it should be illegal — but it is actually rewarded by shareholders and laissez-faire regulators.

So it’s up to watchdogs like me to warn you. Here’s where I get the most complaints about hidden fees and what you can do when you uncover them. I refer to it as the ABCs: airlines, banks and credit cards.

Airlines.

America’s airline industry used to offer you a straight-up proposition: you buy a ticket and in exchange, you get a comfortable seat, a meal, and the ability to check at least one bag. But in order to ensure their continued profitability, air carriers quietly removed each of those items from the ticket. No more guaranteed seat assignment, meal, or checked suitcase. That “service” costs extra on many airlines.

Oh, and those fees were (at least until the government stepped in) barely disclosed, resulting in billions of dollars of revenue every year. Many fees are still hidden.

Tip: Certain domestic carriers like JetBlue and Southwest do not charge many of these fees.

Banks.

When it comes to hidden fees, the banking sector is one of the most aggressive industries. With new surcharges that ding you for keeping a low balance and even for depositing large coins (no joke) its creativity knows no bounds.

A recent survey by Javelin Strategy and Research suggested that 11 percent of customers who switched banks were upset about the preponderance of these fees, which are often so poorly disclosed that customers don’t know about them until they’re on their monthly statement.

Banks depend on these little charges to pad their earnings and they walk a fine line between offending customers and earning revenue. Some do better than others. As a general rule, credit unions offer the least fees and the most service.

Credit cards.

If you have any doubt that credit cards are some of the biggest offenders when it comes to hidden fees, just read your credit card agreement. If you can find it. The agreement is constantly changing and although the company issuing the card is required by law to notify you of any new terms, its disclosure is terrible.

The fine print is rendered in 7-point type, which no human is capable of reading. Credit card fees are amazingly creative. Perhaps the worst one I come across with any regularity is the foreign transaction fee, which applies to any transaction with an international company, even if it takes place in the United States and is in dollars – no currency exchange is required.

No one finds out about this fee until it’s too late, typically. Although, some credit cards, such as Capitol One, don’t charge this kind of fee.

To be sure, the ABCs of hidden fees are just a small segment of the surcharge universe. But it is the most visible part and unless smart consumers know how to deal with these businesses – and discourage the practice of shrouding surcharges in fine print or deep within their websites by staying away from the worst offenders – others are sure to follow.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions by email.