Are you being overcharged?
Americans pay billions in avoidable fees every year, often without even knowing it. Save money with the following tips.
Many of the agreements we sign with telephone, television and Internet providers, financial services companies and credit card issuers have extra charges buried in the fine print. As a result, it’s easy to get overcharged without even being aware of it. In fact, recent estimates are that Americans pay over $216 billion -- that’s about $750 per person -- in avoidable fees every year.
Here are some common charges to watch out for:
Telephone and television
- Phone service charges: Check your phone bill to make sure you aren’t paying for services you never use, such as call forwarding. If you discover that you are, call your phone company and request to have them canceled. You can also save on directory assistance by using the Internet to search for phone numbers.
- Long-distance fees: Select a long-distance plan that suits your calling patterns -- if you make few calls, don’t choose one with a flat monthly fee. If you make many, consider switching to a low-cost Internet phone service or VoIP (voice over Internet protocol).
- Cell-phone plans: If you rarely use your cell phone, you can save more with a pay-as-you-go plan rather than one with unlimited airtime. If you don’t use your cell for business, get a plan with free evenings and weekends. Sending text messages or photos from your phone? Make sure you’re aware of any extra costs you may be paying for this service.
- Television packages: Review your cable or satellite TV bill to make certain you’re not unwittingly paying for “theme packs” of channels you never watch. You may be able to save a considerable amount each month by switching to a more standard package.
Investments
- Management fees: Mutual funds carry management fees -- sometimes as high as 2 percent. They may also include “loads” or “shareholder fees,” which are commissions charged when you buy or sell them. Ask your financial adviser for a written list of all the fees associated with your investments to be sure you understand exactly what you are paying for.
- Administrative costs: If you have a 401(k) plan with your employer, ask for a breakdown of fees. Although you may not be able to influence the decision makers, you should understand how the plan’s investments are chosen and what the administrative costs are.
Credit cards
- Penalty charges: Late fees cost credit card customers some $31 billion a year. Mark the monthly due date in your calendar so you remember to pay your bill on time. Paying online rather than by check will also ensure that slow postal service won’t delay your payment.
- Annual fees: Many credit cards carry an annual fee. If yours does, you should receive a useful benefit in return, such as a lower rate or a rewards program. If not, switch to one of the many cards with no yearly charge.
- Surcharges: If you take your plastic on vacation, note that credit card companies often add a surcharge when they convert foreign currencies. You can save by paying for some purchases in cash.
Insurance
- Life insurance: Some life insurance policies have savings components that are expensive and unnecessary if you have other investments. Term insurance is generally the least expensive way to buy coverage with no frills.
- Auto insurance: If you are paying for auto insurance for a child who is studying at college, let your insurer know. You may qualify for a discount if your young scholar maintains a “B” average or above. The carrier may also reduce your rate if your child is leaving the car behind and studying out of town.
- Home insurance: You may be able to lower your home insurance premiums if you let your insurer know about any improvements or safety features you’ve recently added, such as a security system, new wiring or updated heating system.
In general, whenever you order a new service, buy an investment or sign a contract -- especially if you’re responding to a promotion -- always ask about additional fees. Get into the habit of reading your bills carefully and call the company if there are any charges you do not understand. Doing so could save you literally hundreds of dollars a year.
Published on April 13, 2007
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