Hidden fees derail debt management, hurt credit

Imagine that you're a victim of identity theft, or your private information has been stolen. Some con artist guy or gal has your bank PIN number or has hijacked your PayPal account. Maybe the thief has opened up a credit card account in your name and has been running up charges for months on end, never to be paid off. He or she is stealing hundreds of dollars from you each day, running from Manhattan, New York to Pittsburgh, PA, to Cincinnati, Ohio enjoying a spending spree on your tab. Your credit score might be ruined. You might already be in debt management or credit counseling, but you now need to enter emergency, kamikaze money-management mode. You need to stop this theft – why declare bankruptcy because someone else has violated the law?

What if we told you that your money was being ripped off every day -- in small increments, right under your nose? What if you were giving up this money willfully and lawfully? What would your debt management plan look like if you knew you were losing nearly a thousand dollars or more through hidden fees, which is standard for Americans, according to MSN Money?!? What would you think of your credit score if you knew that your credit card bills were unnaturally high?

Bob Sullivan is author of a revealing book titled Gotcha Capitalism. He calls family income loss by hidden fees the biggest white-collar crime in America. Sullivan reveals that some of the most pernicious “gotcha” fees are present in items we use and pay for (or pay off) nearly every day: cell phone and text messaging fees, credit cards, bank ATMs and so on. Worse, he says, some families lose $2,000 each year to hidden fees. And Consumer Reports is even more pessimistic, estimating that in 2004, the average family lost closer to 4 grand in hidden fees each year. How's that for scary?

Team up with your Advantage CCS debt management team or credit counselor and learn how you can eliminate “gotcha” fees from your life

When it comes to derailing debt management plans, banks are the worst culprits. The Pittsburgh-Post Gazette and the Washington Post both reported on Mar. 2, 2008 that banks charge users hidden fees while staying mum about the fees despite laws requiring disclosure to consumers. The Pittsburgh, Pennsylvania paper reported that banks do not really protect their customers against overdraft fees. Instead, they fine customers up to $50 for overdrawing their accounts – a real swindle when you consider that many banks tout their fabulous “overdraft protection plans” as a prime reason to sign up for accounts. The Washington paper reported that the Government Accountability Office (GAO) found egregious deceit among banks charging consumers for overdraft fees.

Other culprits that can hurt your debt management efforts and your credit score are your monthly credit card and cell phone bills. You might be racking up charges on a phone bill because of frequent text messaging, a fact that is not disclosed in some cell phone plans. Bob Sullivan also finds that most cell phone companies lock consumers into contracts by charging hefty cancellation fees. Or worse, your cell phone company might change the terms of your plan, forcing you to accept those terms or to pay more cash to switch to another plan within the company.

Late or missed payments on credit cards are big credit score downers – and many credit cards come with hidden fees or interest rates. CBS News reports that late fees can top out at nearly $40 and can cause your “low” interest rates to skyrocket. Some credit card companies also charge if you pay your card's bill on time BUT have paid another bill (such as a utility payment you put on credit) late, as part of the contract. The dirtiest trick of all is when a credit card company charges you for sticking to your debt management plan by not using the card. They'll tack on additional fees because your account usage has languished. That's good motivation to cut out debt by credit altogether, eh?

Finally, paying bills late will smack you with fees you can easily cut. Discuss the importance of making timely bill payments with your debt management or credit counselor. If you're enrolled in group debt counseling sessions, share your wisdom with the group. It's simple: If you pay your gas or electric bill late, you will incur fees. If you pay your rent late, your landlord can charge you additional rent (this is standard in many leases). Even if you're not late – perhaps you're a “last-minute” type of person – you can still be charged. Many gas and electric companies charge fees for paying bills over the phone, so it's best to get those bills in on time -- either online, through snail mail, or with aid of automatic deduction from your checking account. So pay those bills on time!