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Many of us are unaware that services we assume are free actually have a fee attached. Most of the time we don't even think to ask about the charges. And that can be expensive. Any business that provides a service can tack on fees that may be tough to discover without a magnifying glass. But the most costly by far are hidden charges we pay over and over again for credit cards and bank accounts.
To help you avoid them, we have put together a collection of the most common and surprising charges. We also advise how best to fight them.
Issuers of bank credit cards aggressively seek to increase income by raising fees and adding more stringent terms and conditions. A significant number have reduced the grace period (period you have to pay your bill before interest is added) to 20 days. Also if your payment arrives one day late, you could be billed an extra $30. Late fees have risen 46% in the last two years and now average over $20.00.
Once you reach your credit limit, you can continue to make purchases, but you'll be charged a stiff penalty for exceeding the maximum. These fees— which average $18.66 and often go up to $30—are charged in addition to interest on the unpaid balance. What's more, penalty fees sometimes put consumers over their credit limit, thus triggering new fees.
Charges to Watch for:
How to Fight Back:
You should be able to avoid monthly maintenance fees by keeping a minimum balance in your checking account ($500 is often enough—Seniors often have a lower amount or none). More than 200 different fees are on the books and new fees appear to be introduced daily. The trend seems to be a separate charge for every service.
Charges to Watch for:
How to Fight Back:
If you have a choice in electric suppliers, ask:
The majority of consumers rely on local utilities to produce a safe and ample supply of water. Your local water agency is responsible for sending you an annual Consumer Confidence Report that should list the source of your water, what contaminants may be in the water, and information on the safety levels of contaminants and their effects on health.
For more information call the Environmental Protection Agency's Safe Drinking Water Hotline at 1-800-426-4791 or visit EPA's web site at www.epa.gov/safewater.
Now you can choose your long-distance carrier as well as your local toll and/or local phone service if there is competition in your area. An increasing number of companies sell optional services such as voice mail, call waiting, caller ID, paging, and wireless service.
The National Consumers League maintains a web page to help you understand all of the charges on your phone bills and help you recognize fraud: www.nclnet.org/phonebill/index.html.
Calling Plans and Other Services
Think first about how you use the telephone.
With these answers, you can compare services and prices. You may want a package deal from one company or services from different companies.
Find out how companies' services work, including whether there are minimum use, time-of-day or distance requirements, flat monthly fees, or special plans. For example, wireless service may be cheaper than regular local service if you don't make many calls.
Get the information in writing and don't be pressured into an immediate decision.
Make sure you're comparing similar plans and features to determine the best rates. The Telecommunications Research and Action Center, a nonprofit group, offers information about residential and small business long-distance rates, and wireless service. Contact TRAC at P.O. Box 27279, Washington, DC 20005 or visit its web site at www.trac.org .
Pre-paid Calling Cards
Many drug and grocery stores sell pre-paid calling cards, and they are sold online, too. Before buying one, know the:
Don't be Slammed or Crammed
Slamming is the illegal act of switching your long distance, local toll or local telephone company without your permission. On your phone bill, you may find:
Cramming is when companies add charges to your telephone bill for optional services you never agreed to such as voice mail or club memberships. You may not notice these monthly charges because they're relatively small — $5 to $30 dollars — and look like your regular phone charges.
To avoid being slammed or crammed:
Read fine print on contest entry forms and coupons. You could be agreeing to switch your phone service or buy optional services.
Watch out for impostors. Companies may falsely claim to be your regular phone company and offer some type of discount plan or bill consolidation. They may also say they're taking a survey or pretend to be a government agency!
Warn family members and employees. Be sure that only those authorized talks to a company about telephone service.
Beware of "negative option notices." You'll be switched or signed up for optional services unless you say no.
Look at your telephone bill carefully every month — especially the pages that show the details.
Fraudulent companies may switch your phone service or add new services to your bill as a result of your calling a pay-per-call service (see page 13).
Resolving Slamming or Cramming Problems
Under Federal Communications Commission rules, no telecommunications carrier can arrange to switch your service to its own without verifying that you agreed. If you've been slammed:
Generally, consumers can't be held liable for services they never agreed to buy. If you've been crammed:
Your phone service cannot be shut off for refusal to pay for unauthorized services. For more information about FCC rules, call 1-888-225-5322 or go to its web site at www.fcc.gov and click on Consumer Info.
Pay-Per Call Services
You can get everything from recorded sports scores to live psychic readings by calling 900 numbers that provide information or entertainment services.
These numbers are sometimes also used to conduct surveys or contests, or for charitable fundraising. The "information provider," the company or organization you're calling, sets its own price for the service, and usually bills you through your local telephone company.
The federal Telephone Disclosure and Dispute Resolution Act requires advertisements for pay-per-call services to tell you:
The rules bar advertising pay-per-call services directed to children under age 12 unless they are for legitimate educational services.
If the charge for pay-per-call services will be more than $2, you should hear the following information when you dial the number:
Toll-Free Numbers and Pay-Per-Call
Generally, 800, 888, or 877 numbers are toll-free. However, charges for pay-per-call services through 800, 888, and 877 numbers are allowed if you:
It's illegal to be connected to a 900 number pay-per-call service through a toll-free number, or for a pay-per-call service to call you back collect after you dialed a number that you thought was toll-free. Both the FCC (Toll-free, 1-888-225-5322 or www.fcc.gov) and the FTC (Toll-free, 1-877-382-4357 or www.ftc.gov) have rules concerning pay-per-call numbers.
You have the right to dispute pay-per-call charges if:
Pay-Per-Call Charges: Protect Yourself
Your local and long-distance telephone service cannot be disconnected if you refuse to pay for disputed pay-per-call charges.
Act promptly — you generally have 60 days to dispute the charges. If they appear on your phone bill, call the local or toll-free number that is listed on that page.
Note who you spoke to and what was said.
Follow up with a letter, keeping a copy that explains the problem and confirms your conversation.
Deduct the charges you are disputing and pay the rest of your bill by the due date. You should hear back from the company within 40 days and the problem should be resolved within 90 days.
If the charges appear on your credit card bill, follow the instructions on the bill for disputes. The information provider can pursue the matter through a collection agency or other legal means, including reporting the debt to a credit bureau. If you're contacted by a collection agency, explain in writing why you dispute the charges. You can also put a written explanation in your credit report.
You may have other rights according to state law. Check with your state or local consumer protection agency or state utilities department.
If the dispute concerns information services provided through a number that may not be covered by the pay-per-call rules, such as foreign phone numbers, find out if you have any protection under state law. You may have to work out a payment agreement with your long-distance company to avoid losing your service. To prevent 900 number calls or foreign calls from being made, you can request "blocking" from your local phone company for free or for a reasonable charge.
Foreign Phone Numbers
Information and entertainment services can get around pay-per-call rules by using foreign phone numbers. Most foreign phone numbers require dialing 011 first, but some are dialed just like long-distance numbers in this country, beginning with 1 and then a three-digit area code such as 809 (the Dominican Republic) or 758 (St. Lucia). If you don't know if a number is domestic or foreign, call the operator and ask.