What to Know About Hidden Fees That Increase the Price of Everything

What to Know About Hidden Fees That Increase the Price of Everything

This story is part of Recession Help Desk, CNET's coverage of how to make smart money moves in an uncertain economy.

What's happening

Many companies have found ways of passing down increased costs to consumers, with extra charges tacked on to your bill at checkout.

Why it matters

It's called drip pricing, and these new fees and surcharges are affecting customers who are already struggling with rampant inflation.

What it means for you

Knowing what merchants are charging can help you manage your budget and make better buying decisions.

The prices for nearly everything have ballooned in the past year. Record high inflation means the cost of food, fuel and other everyday essentials has gone up, which has put severe financial pressure on US households, particularly low-income Americans. 

Look out for surcharges like these on your restaurant bills.

Courtney Johnston/CNET

And then there's the hidden costs added to your purchase before checkout, or tacked on to the receipt without warning. 

These additional merchant fees are called drip pricing, and they're inflicting pain on our already-stretched wallets. Businesses often claim these fees are the only way to offset the burden of inflation and supply chain shortages. For consumers, it means the things we buy are pricier than they initially appear. 

"Most of the time we find out about these fees when it's time to pay, not before," Ashley Feinstein Gerstley, author of Financial Adulting, told me via email. "Because these fees really run the gamut, you never really know what you are going to get." 

I asked my Instagram followers about these new and surprising fees, and they gave me loads of anecdotes. From restaurants to medical offices to rideshare services, here's a look at some charges that I discovered. 

And I'll offer tips on how to manage these unexpected surcharges.

---

Restaurants are charging more, and not just for food

Many restaurants are still reeling from a fiscal slump during the first year of the COVID-19 pandemic. Now, with rising food and payroll costs, eateries continue to struggle. "Average small business restaurants run on very tight margins of around 3 to 5% pre-tax," said Hudson Riehle, senior vice president of research with the National Restaurant Association. "The typical restaurant business model is not set up to deal with this sustained and accelerated cost of food and labor, which is putting extraordinary pressure on operators, and indications are these will continue." 

Here are some of the new fees you may see on your restaurant bill: 

Credit card surcharges

Earlierthis spring, major creditcard companies like Mastercard and Visa increased interchange fees, which is what merchants pay to card issuers every time a customer uses a credit card. Also known as "swipe fees," they cost businesses 1.5 to 3% per transaction. They're most challenging for smaller establishments like restaurants, and some are passing this expense on to customers as a percentage of their total bill. 

When Feinstein Gerstley dined out with her family last summer in Sapphire, North Carolina, the restaurant charged a credit card processing fee that she says was not mentioned until the bill arrived: "We were a party of 15 who had drinks, apps, dinner and dessert so the charge was substantial, over $100." Many states permit businesses to pass on their card swipe fees to customers, but they must properly disclose the surcharges on visible signage and their websites. The customer fee also cannot exceed what the business pays to the credit card companies.

Increased labor costs

Back in April, Sarah Morisson saw a $5 surcharge when the bill for her enchiladas arrived at a restaurant in Alpharetta, Georgia. The reason? "Increased labor costs." This may also be called a "kitchen appreciation fee" in some eateries and comes in the form of an added $3 to $5.

Health care charges

Restaurants are competing for workers and offering more benefits as a draw. This added cost may show up on your receipt next time you eat out. In Chicago last month, Rema Shamon noticed a few dollars added to her dining bill labeled "health care for staff." Similarly in West Hollywood, California, Claudia Scott was charged 3% more for "employee health insurance" at a local eatery. 

Add-ons for staff who don't get tips

At a sandwich shop in Portland, Maine, a couple weeks ago, Jennifer Steralacci and a friend paid a $4 fee "for non-tipped staff" -- and that was on top of the gratuity. "I didn't recall seeing anything on the menu that indicated this charge," Steralacci told me.

---

Rideshare and food delivery apps are charging more for gas

Fees were already climbing because of the pandemic, but as rideshare companies compete to hire drivers, they're luring them with sign-on bonuses and higher pay. That's another reason your rideshare total seems more expensive than ever. On top of that, in March, Uber and Uber Eats announced a new fuel fee to help drivers cover the cost of rising energy prices. 

That'll cost an additional $0.45 or $0.55 on each Uber trip and either $0.35 or $0.45 on each Uber Eats food order, depending on the location. Uber says 100% of that fee goes to drivers.Rival rideshare companyLyft has also announced a 55-cent fuel surcharge. Grocery delivery app Instacart says it's tacking on a new 40-cent fuel fee, too.

---

Fees at doctors' offices are adding to the shock, too

Increased supply and materials fees

Keep an eye out for this line-item cost at your next medical visit, which ranges in price. In Dallas, Kelsie Whittington got hit with an unusual $18 "supply fee" after her son's routine pediatrician visit in May. The medical office explained that it was for pricier bed covers, needles, gauze and other equipment. 

With insurance companies slow to issue reimbursements, the clinic was having patients eat the cost. "I was a little shocked at first, then empathetic. I needed to pay for my son's health," Whittington said.

Facility fees

While doctors' offices have been charging facility fees since before the pandemic, patients may not know about them until they receive an itemized bill. According to Consumer Reports, facility fees, which typically cover the cost of maintaining the medical office, urgent care center or clinic that's owned by a hospital, can add hundreds of dollars to a bill... and insurance may only partially cover it.

---

What can you do about all the extra hidden charges?

To minimize the blow of these new fees and surcharges, we need to gather facts and self-advocate. Here are four pieces of advice:

1. Question the fees: We may feel awkward or embarrassed to ask about new and unusual charges. But if a business is not upfront and hasn't disclosed their charges ahead of time, it's within our right to understand and ask questions. We may learn that the fee is justified and we're actually happy to pay it and continue patronizing. In other cases, it may deter us from returning.

2. Ask for a cash discount: Like many gas stations, some restaurants offer cash discounts to help minimize their credit card processing costs. For example, at The Fifth Season restaurant in Port Washington, New York, cash-paying diners receive a 3.5% bill reduction through its Cash Discount Program promoted on the eatery's website. 

Even if not advertised, ask if a business will offer you a cash discount, a win-win for both you and the merchant. I've successfully used this trick at small, independently owned stores, too. 

3. Think twice about using third-party delivery apps: Delivery apps are convenient but they can quickly double the cost of your pizza order after fees, taxes and the suggested 25% tip. Ordering takeout the old-fashioned way by calling the restaurant directly could result in substantial savings. Some eateries may require you to pick up the food, but others may offer free delivery of their own -- just be sure to tip the driver. If you want to stick with third-party deliverers, MealMe helps identify the lowest options by comparing pricing across the board.

4. Vote with your feet: It's our choice where and how to spend, and if paying extra fees is too much to bear, we have the right to walk away and patronize a different business next time. When a restaurant manager refused to remove the surprise credit card surcharge, Feinstein Gerstley said a family member in attendance shared the experience on Yelp. "We definitely didn't return to the restaurant," she said. 

If a charge does not come with any adequate disclosure, the merchant may be in violation of state laws, so consumer advocates recommend filing a complaint with both your credit card issuer and the state attorney general. According to Riehle, "The restaurant industry is very competitive, and operators know that if a consumer's last experience doesn't meet their expectations, they are likely to vote with their feet." 

---

Source

Tags:

• Credit Card Hidden Fees
• What Are Hidden Costs
• Hidden Fees When Buying A Home
• What To Know About Health Insurance
• Whattomine
• What To Do When Bored
• What To Expect

What to expect in the housing market what do you know about housing features of good housing what to expect from the iphone 14 what to expect from the texas driving test what to expect from therapy pdf what to expect from chemotherapy what to expect from a teacher what to expect from a manager whattomine

What to expect from the housing market in 2022: Another sellers' market

What to expect from the housing market in 2022: Another sellers' market

This story is part of The Year Ahead, CNET's look at how the world will continue to evolve starting in 2022 and beyond.

The last 22 months have been some of the wildest in real estate history, as the COVID-19 pandemic accelerated the speed and intensity of recent trends. Home prices surged to record-breaking highs. Interest rates dropped to historic lows. And, amongst it all, the new era of online home buying and selling took further root. On top of that, just about every contemporary macro-economic trend -- from inflation to supply chain woes to labor shortages -- made an appearance in the 2021 housing market, increasing the advantages of existing homeowners, daunting prospective homebuyers and, ultimately, further widening wealth inequality in the US.

Though no one can predict what the next year will bring, we've asked some industry experts to help us read the tea leaves. Perhaps most significantly, home prices are expected to continue to rise, though at a slower rate than last year. As such, the 2022 housing market will present challenges for new buyers looking to get a foothold. For those looking to sell, new technologies like iBuying will continue to streamline and simplify real estate transactions. And existing homeowners will likely have another year to capitalize on rising property values through refinancing -- if they haven't already. 

Experts also predict an extension of two major 2021 trends: low housing inventory and supply chain issues, both of which will continue to hamstring construction and renovations. Meanwhile, there are two new spectres on the scene: inflation and rising interest rates. "For a homebuyer, 2022 is going to require patience and strategy," said Robert Dietz, chief economist the National Association of Home Builders.

"If you think you're going to wait on the sidelines for the market to cool off, that usually doesn't work," cautions Karan Kaul, senior research associate at the Urban Institute. "Timing" the market is a tricky enterprise, and prices seem unlikely to decrease meaningfully any time soon. 

With the caveat that political and virological developments can wreak havoc on this unpredictable corner of the economy, here are some of the major factors experts see influencing the housing market in 2022. 

Still smoking: Home prices continue to rise

If you already own a home, you're more than likely to be in a fortunate position. Skyrocketing home values have continued to increase equity for homeowners in many US regions throughout the pandemic, according to Dietz. 

Combined with historically low interest rates, a record-breaking number of homeowners were able to tap into their home equity in 2020. As property values surged during the first year of the pandemic, cash-out refinancing levels were at their highest since the 2007 financial crisis.

Of course, this creates a much more difficult situation for prospective homebuyers. And that's unlikely to change much in 2022. Although prices are expected to increase at a lower rate next year, they are expected to continue to rise. And that -- in addition to higher interest rates -- will create considerable headwinds for buyers throughout 2022. 

Clogged supply chains cause more delays

Supply chain disruptions caused by the COVID-19 pandemic continue to delay shipments which impedes new construction. That is only making the market that much more competitive along with the rising price of existing homes across the US. And the number of people looking to buy is also increasing, thanks in large part to millennials entering the housing market in growing numbers.

"We've seen so much interest in buying homes over the past year and a half, it's a bit difficult to project when that is going to lose some steam," according to Robert Heck, vice president of mortgage at Morty, a mortgage-tech start-up. But it's clear there are still plenty of buyers trying to enter the market despite prices continuing to creep up.

"Despite the fact that builder confidence is pretty strong right now, in the short run there is a lack of building materials, higher cost of building materials like lumber, appliances, windows and doors, and even garage doors," said Dietz. And further complicating the picture is a sustained labor shortage, particularly for skilled construction workers.

Delivery delays can extend build time by as much as four to eight weeks for a typical single family home. And if there aren't enough contractors on hand to use those materials once they show up, it's clear that demand will continue to outweigh supply for some time to come.

Macro headwinds: Interest rates and inflation 

Prospective homebuyers will want to keep their eyes on some wonky stuff in 2022. The Federal Reserve announced that it will wind down bond purchasing and look to raise interest rates next year. And higher interest rates will only make things more difficult for those looking to buy, as they raise both the average monthly payment and the total lifetime cost of a mortgage. 

 And don't forget about inflation! That will almost certainly increase both the cost of home building materials and skilled labor. In fact, the National Association of Realtors' anticipates that annual median home prices will increase by 5.7% in 2022.

And yet it's not all doom and gloom. Mortgage interest remains are still quite low. And there are pockets of affordability in many regions of the US, creating a key opportunity for those fortunate enough to be able to work remotely. 

"Mortgage rates are still at historical lows, and it's been harder than ever to predict where things are going thanks to the ongoing COVID-19 pandemic," said Heck.

Tech innovations reshape home buying

Digital lending has already impacted the way Americans shop for homes. The rapid rise of online real estate brokerages and mortgage marketplaces has made it easier than ever to browse properties and finance a home. That's unlikely to change: Almost 40% of millennials said they would feel comfortable buying a home online in a recent Zillow study. 

"Consumers like the ability to bid remotely, and to really take a look at properties and neighborhoods online," said Miriam Moore, division president of default services at ServiceLink, a mortgage transactional services provider. This will likely impact both sides of transactions, as sellers learn to adapt their home's curb appeal to someone looking at it on their phone and buyers (and agents and investors) look for ways to arbitrage the market.

An evolving challenge: Climate change

Perhaps the biggest unknown in real estate is how soon climate change will become the dominant factor. According to experts across the industry, every part of the homebuying process will eventually be affected by changing weather patterns, encroaching shorelines, shifting flood zones and an increasingly complicated insurance marketplace. Case in point: Moore, who is in the mortgage business, has seen an increase in inspections due to weather and fire over the last year.

New construction may prove to be both more energy efficient and more durable in the face of extreme weather. "People want to live in energy efficient homes, but they can only buy them if they exist," said Kaul, at The Urban Institute.

The stakes couldn't be higher. Buying a house remains one of the most reliable ways to build wealth and has long been a key milestone for Americans in establishing long-term financial security. And although interest rates remain as low as ever, given all of the other trends impacting the real estate market in 2022, the balance of power is likely to remain in the hands of sellers.

---

Source