Money 101: The Lowdown On Hidden Finance Charges

So you’ve just noticed the $4.99 mystery charge on your cell phone bill; and, how annoying, that “emergencies only” credit card you never use billed you $15 for your frugality? We consulted two experts to find out if these and other hidden charges are legit, and if there’s any way to avoid being nickel and dimed right into the poorhouse. Deborah Owens, women’s wealth coach and author of A Purse of Your Own, says it’s more than just sweating the small stuff. “This is about knowledge, and knowledge is power,” says Owens.

Danny Orrock, a consumer protection expert in Atlanta, says while President Obama has made Washington more pro-consumer, the burden is still on you to pull out the magnifying glass to read your financial agreements. “Legally, no legitimate charge can be completely hidden from you,” Orrock says.

We asked our experts to spare us the punishment of actually reading the fine print on our credit card agreements, and tip us off to the sneakiest charges we might not know about.

  • Overdraft fees: Overdraft protection on your checking or debit account might sound like a safety measure, but beware that a $3 trip to Starbucks doesn’t earn you a $29 overdraft fee. Agreeing to overdraft protection allows your banking institution to give you a very expensive cash advance, says Owens.
  • Credit card interest rate hikes: Orrock says to recognize “teaser rates,” designed to lure you in. “Although many cards have a low or even zero percent introductory rate, you can be certain that the rate will go up within 12 months.” Tricky tricksters!
  • Cable/phone/internet bundles at introductory rates: “These bundles are marketed to us as convenience, just to get us in the door,” Owens says. “But convenience costs.” Fees will increase after the introductory rate expires.
  • Cash advances or balance transfers: “A lot of people are not aware that credit cards will charge a few percent for every cash advance or balance transfer,” says Orrock. “This usually comes out to three to five percent per transaction, and that’s on top of the interest charges.”
  • Late fees: If you dropped the ball paying your bills, you can expect a late penalty anywhere from $2.95 up to double digits.
  • Cell phone pass-through charges: Owens warns that giving away your personal cell phone number for free ring tones or other text services could result in pass-through charges racking up on your mobile bill.
  • Inactivity fees: Damned if you do, damned if you don’t. Not spending on a credit card for six months (or less) could cost you up to $15.
  • Foreign transaction fees: “Another unwelcome surprise for travelers is the foreign transaction or currency conversion fee,” says Orrock. “This usually amounts to a few percentage points on top of the going rate to convert foreign currency to U.S. dollars.”

So, can any of these pesky fees be removed, and what are the magic words our friendly customer service representative is waiting to hear? Owens says women especially are too often timid and avoid the confrontation. She says the key to negotiating the removal of a fee is to think with a business perspective. “Companies want high lifetime value customers,” she says. “It cost much less to keep a customer than to find a new one.”

Our experts suggested the following tactics for negotiating to remove a charge:

  • Explain your value: If you have a credit card late fee, explain how long you’ve been a valuable customer and your history of paying bills on time until this slip. If you’re trying to reduce your interest rate, use your good credit score as a hammer. If the company knows you’re willing to take your debt somewhere else, they’ll be more likely to drop your rate.
  • The real party of “no”: Customer service agents are trained to say no. If you think a charge is unfair, ask for a supervisor. Don’t hesitate to ask for your service agent’s name, or company identifier.
  • Go in person: If possible, hang up the phone and go into the utility’s office in person. Face-to-face is always more effective.
  • Develop a relationship: Just what you need, right? Another relationship to cultivate? Owens recommends bypassing the ATM and going into your bank, getting to know the manager, and make sure they remember you.
  • Always open and read your bills: Automatic bill pay is convenient, but are you really inspecting your bills line by line? Or do you just click and pay, because it’s around the same amount as last month’s bill?

The Money section and all articles within it are sponsored by Free Credit Report; however, the articles are all independently produced by The Frisky and the opinions and views expressed by the writers and experts are their own.