It’s been a hard year for middle-class America. In September, more than half of all American families reported they were feeling some degree of financial hardship, largely due to out-of-control inflation, according to a Gallup survey.
The federal government has taken a variety of steps to try to get inflation under control and reduce the financial pressure on American families. Most recently, President Biden announced a plan to eliminate some so-called “junk fees,” such as hidden cancellation costs and convenience charges.
Wondering which fees you might not have to pay anymore? We cover three useless fees the Biden administration is reportedly eliminating — and suggest three more junk fees we hope the government goes after next.
With any luck, not having to find the money for these fees will help get you on the road to moving beyond living paycheck to paycheck.
Overdraft fees for checking accounts
If you don’t have enough money in your checking account to pay for a transaction, your bank might cover some of the cost for you — for a fee.
These overdraft fees are typically in the range of about $35 for each transaction, according to the Federal Deposit Insurance Corp.
Overdraft fees can make tricky financial situations more difficult. Not only do you lack the money to make a crucial transaction, but now you also need to pay the bank a fee for overdrawing your account.
If you’re wondering how you’re supposed to pay a fee you incurred for having an empty account, you’re not the only one. The Biden administration hopes it can put a little money back in Americans’ pockets by cutting down overdraft fees by $3 billion a year.
Late fees for credit card payments
If you don’t have enough money to make a credit card payment by the due date, most banks charge you a late fee on top of the money you already owe.
According to the Consumer Finance Protection Bureau, Americans paid a total of $12 billion in credit card late fees in 2020. Now, the Biden administration aims to drastically trim that figure.
Pro tip: Are junk fees and other costs keeping you awake at night? Setting up a budget and looking at ways to trim your costs can help you eliminate unnecessary money stress.
Phone and internet service provider termination fees
Many phone and internet plans require you to sign a contract instead of letting you pay month to month for service.
If you need to cancel your phone or internet plan — for instance, if you’re moving or you’ve discovered that the service doesn’t work for you — the company might charge you a fee for the privilege.
Seems unfair, right? The Biden administration agrees. Hopefully, phone and internet service provider termination fees will become things of the past sooner rather than later.
In addition to the fees Biden specifically mentioned, we would like to see the administration go after at least three more. They are:
Credit card convenience fees
Using a credit or debit card often seems like the most convenient way to pay a seller. But when you use a credit card, the merchant often has to pay fees to credit card processors, issuers, and networks.
As a result, these merchants may turn around and charge a "convenience fee" to you for using the credit card.
Such fees help merchants recoup their costs, but they are an added cost for customers. The fact that not every business charges convenience fees proves that businesses can thrive without passing these fees to customers. We would like to see the fees disappear.
Have you discovered that you’re paying much more for eating out than you did in the past? It’s not just inflation: Some restaurants are adding fees to boost their bottom line.
For example, Macaroni Grill has been adding a $2 surcharge to customers’ bills, and some smaller local restaurants have added fees ranging from 3% to 20%.
Some restaurants say they charge these fees as a way to keep afloat in an era of inflation. Others say higher labor costs are forcing them to charge the fees.
Such restaurant fees leave us with a bad case of indigestion. At the very least, you should be informed of any extra fees upfront instead of being served an unpleasant surprise at the end of your meal.
When you withdraw money from an ATM, you’re removing funds from your own bank account. So why do you have to pay a fee to access those funds?
You definitely shouldn’t have to. We hope the Biden administration points that out to banks ASAP.
With prices rising at a pace not seen in 40 years, every penny saved can make a big difference to your bottom line.
Hopefully, the Biden administration’s effort to remove some of these junk fees will let you keep more of your hard-earned cash in your wallet and help you to fight back against inflation.
Our fingers are crossed that even more changes to sneaky, hidden fees are ahead.