Common junk fees & how to avoid them: 9 sneaky charges to watch out for
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Key Takeaways
Junk fees are hidden charges that raise everyday costs, often found in banking, travel, ticketing, and subscription costs.
Avoid junk fees by reviewing the fine print on subscriptions and service agreements, and setting low-balance alerts to fund your account before autopay triggers a penalty.
By showing kids how junk fees work, like overdraft or service fees, you can help prepare them to be more financially responsible adults.
In our digital, always-on world, we often take a "set it and forget it" approach to many things, including finances. While that can be a good way to avoid thinking about things, it's not the best policy in a world full of junk fees.
From bank overdraft fees to credit card late fees to hotel resort fees, the examples of junk fees go on and on. If you're not vigilant about these frustrating hidden charges, they can quickly add up, and your budget likely doesn't include a junk fee section.
Understanding junk fees isn't just a way to save some money. It's also an opportunity to teach your kids about financial responsibility.
What are junk fees?
Junk fees are unexpected or hidden charges added to the advertised price of goods and services that make the final cost higher. Junk fees are often unexplained and make it hard to compare the actual cost of something to a competitor. These fees don't add any real value but can significantly impact your out-of-pocket costs.
Junk fees show up in banking, travel, ticketing, and subscriptions, and they aren't well regulated by consumer protection laws. Just as you want to avoid getting scammed online, it's in your best interest to avoid paying junk fees when you don't have to. When your kids become adults, you don't want them to make the same mistakes you did.
As parents, it's important to teach kids financial awareness, including where they might find junk fees and how to avoid them.
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9 common junk fees to watch out for
Junk fees are so common that you might not even realize you're paying them.
1. Overdraft fees
Overdraft fees are charges for drawing more funds from a bank account than you have available. This is especially common in automatic payments. When you pay subscription or membership fees automatically, you might forget to keep enough money in your account, especially if you've made a big, uncommon purchase recently.
Some banks allow you to back up an account with a second one in case you overdraft, allowing you to avoid the fee. The Greenlight debit card for kids can also helps families prevent overdraft worry with alerts, built-in spending controls, and no overdraft fees.
How to avoid: Always keep a healthy balance in any account you use to make automatic payments. If you're struggling with overdrafts, set an alert on your phone to move money into the account a few days before payments come due.
2. ATM withdrawal fees
ATM fees are charged when you withdraw money from an ATM outside of your bank’s network. You might see a charge from the ATM owner and another charge from your own bank.
How to avoid: The simplest way to avoid ATM withdrawal fees is by using your bank’s in-network ATMs, which allow for surcharge-free cash withdrawals.
3. Foreign transaction fees
Foreign transaction fees are additional charges added to purchases or ATM withdrawals made outside of your home country. These fees typically range from 1% to 3% of the total transaction.
How to avoid: Check if your current bank waives foreign transaction fees or belongs to a global ATM alliance. If they don't, consider opening a travel-friendly account that offers fee-free international transactions before you depart.
4. Late payment fees
Late payment fees are charged for payments made after a deadline. They're especially common with credit cards, but you may face them for travel bookings and other purchases, too.
How to avoid: You can avoid these charges by setting up automatic payments to always make at least the minimum payment amount by the due date.
5. Paper statement fees
Some banks and credit card providers issue a surcharge for getting paper statements in the mail.
How to avoid: Opt for digital statements to avoid these charges.
6. Ticketing and service fees
Service fees in the ticketing industry are one of the more challenging junk fees to avoid. There are only a few real ticket sellers in the entire events industry, and they all charge service fees for the privilege of buying from them.
How to avoid: Though challenging to avoid, one way to avoid ticketing service fees is to buy directly at a venue’s box office (like a movie theater) instead of on a ticketing platform.
7. Hospitality parking fees
Hotels, resorts, and other hospitality businesses sometimes add parking fees to your bill, even if you didn't park on the property. These charges may be added to your bill without notice, so it's important to review it closely before paying.
How to avoid: Review your itemized receipt before paying and ask about any fees that you don't recognize or believe are unfair.
8. Returned payment fees
Returned payment fees are charged when you "bounce a check." Basically, you write a check that doesn't have enough funds in the account to cover the value.
How to avoid: Keep a record of any checks you write and ensure you have the funds to cover them until they're cashed.
9. Account maintenance fees
An account maintenance fee is a charge from a bank or credit union for keeping a checking or savings account open at their institution.
How to avoid: These fees are often avoidable by meeting requirements like keeping a minimum balance, setting up direct deposit, or using online statements.
How to turn junk fees into money lessons for kids and teens
Even the most financially savvy adults will pay junk fees sometimes. They're so common, you can't avoid them forever. But when you pay a junk fee, it can be a real-world teachable moment for kids. Some strategies include:
Review statements: Read through your bank and credit card statements with your kids to show them where junk fees are charged.
Compare total cost vs. sticker price: When making purchases like event tickets, show your kids how the price changes from the advertised price to the final price after service charges.
These strategies can help kids start building responsible spending habits early.
How families can avoid junk fees
Again, it's very difficult and impractical to avoid all junk fees forever. However, you can take steps to significantly reduce how much you pay them. Practical strategies include:
Read the fine print on any digital purchase.
Review receipts to ensure you aren't overcharged.
Set up alerts for payment dates.
Use your own bank's ATMs.
Plan ahead for subscription payments to avoid accidental overdrafts.
Kids and adults alike can also benefit from financial tools like Greenlight, which helps families track and control spending. The Greenlight app provides financial monitoring with built-in safeguards against overdraft fees by using prepaid accounts, meaning kids and teens can't spend more than what's available.
Teach smart budgeting early. Set spending controls and savings goals, and teach kids how to manage money with Greenlight.
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