'Junk Fees' Could Cost You Hundreds of Dollars. Here Are 5 to Watch Out For

Don't let unnecessary fees eat into your bank balance.

Most of us have been there. You shop around to find the best deal on, let's say, a flight. Then you get hit with a bunch of extra charges for things that used to be baked into the price. These include choosing a seat, checking in online, or carrying a bag. A while back there were even rumors that European airline Ryanair planned to charge customers to use the bathroom.

Those fees add up, and suddenly something that seemed like a great deal turns out to be more expensive than the original options. That's one reason lawmakers want to crack down on so-called "junk fees" -- hidden charges that push up costs and make it almost impossible to compare prices.

Watch out for these junk fees

Junk fees are common in a number of industries, from internet providers that charge you to switch services or hotels that tack on an extra resort fee to bump up the price of your room. Here are some common junk fees to watch out for.

1. Banking fees

There are a number of banking fees to watch out for. For example, your checking account might have a monthly maintenance fee. It might charge you for using an ATM that's not part of its network. Plus, overdraft fees -- the cost of spending more than you have in your account -- can quickly snowball. According to the Consumer Financial Protection Bureau (CFPB), banks made over $15 billion from overdraft fees, with the average cost of $30 to $35 each time.

2. Credit card late fees

The CFPB also has credit card late fees in its sights. Right now, card issuers are allowed to charge up to $30 for the first missed payment and $41 for each subsequent missed payment. The CFPB wants to reduce this to $8, a figure it believes is more in line with the amount late payments cost card issuers. It says card issuers charged $14 billion in late fees in 2019, more than half the total fees of $23.6 billion.

3. Airline fees

Airlines have long been known for their extra fees, in part because of the business models of budget airlines that split out the costs of flying. The argument is that by unbundling the costs, a passenger can choose if they want to pay for things like extra baggage, food on the flight, or choosing your seat. But there's a fine line between unbundling and charging for necessities.

After President Biden called out airlines for charging families extra so they can sit together, some airlines scrapped this fee. The Department of Transportation even has a dashboard where it names and shames airlines who continue to charge family seating fees.

4. Event ticketing fees

Ticketing fees have attracted the wrath of fans, particularly after several high profile complaints over markups and extra fees. Ticketmaster, a dominant force in the industry, says it regularly charges service fees, order processing fees, and delivery fees.

According to Time, fees can be as high as 78% of the ticket price. And that's before you enter the world of dynamic pricing and resale costs. Some news outlets say the markups on resale can reach as much as 7,000%, but it's hard to verify that figure. Suffice to say, fan frustration over exorbitant ticket fees is understandable.

5. Loan and mortgage fees

It's standard to pay closing costs on mortgages and other loans, and lenders are legally required to be transparent about their fees. You may pay a loan origination fee and documentation fees. Mortgage companies can charge fees for home inspections and title searches, all of which add to the cost of buying a home.

The CFPB says mortgage lenders sometimes charge excessive late fees as well as incorrect fees for property inspections. It also highlighted several unnecessary fees associated with payday lenders, including rollover fees and vehicle repossession fees.

How you can avoid junk fees

There are moves afoot to tackle junk fees at a federal level, and several states already have protections in place. However, passing legislation can be a slow process. In the meantime, there are several moves you can make to avoid wasting money on unnecessary fees.

In terms of banking and credit card fees, look for a checking account that doesn't charge a monthly maintenance fee, ideally one that also reimburses out-of-network ATM fees and fits with your banking habits. Check out our article on avoiding checking account fees for more information.

One way to avoid credit card late fees is to set up automatic payments. If you're worried about losing control of your finances, opt to only pay the minimum automatically. That way you can avoid both the fees and knock to your credit score that come with a late payment and still keep on top of your money.

If you're considering a mortgage or other loan, always get quotes from several lenders. Look at the fees you'll be charged as well as the rate you'll pay -- and don't be afraid to question any fees that don't make sense or don't seem fair.

You could also back out of the deal. It's super frustrating to spend hours hunting for the right flight or product, only to get to the checkout and find you're being charged an extra chunk of money for no obvious reason. Rather than start the process again, it's tempting to swallow the extra cost. But, that's what these companies are banking on. If you're willing to put in some more legwork you might find a company that's more transparent and charges less in total.

Finally, if you do feel you've been hit for an unfair or unnecessary fee, report it to the CFPB or your local state attorney. It may not change the fee you've paid, but it might mean the company changes its practices in the future.