Costly fees you should never pay

Fees! Consumer Reports hates them as much as you do. And not just because all of that nickel-and-diming adds up to a pretty penny. It’s also because they can be hard to escape.

Consumers pay $2.4 billion per year in credit-card late fees — and $800 million in expedited payment fees to avoid those late charges. We cough up $31 billion annually in debit-card overdraft fees. That’s a lot of $30-a-pop penalties for payments that banks authorized in the first place.

Airline fees can be just as bad. Spirit Airlines, for example, ropes you in with its claim of “ultra-low fares,” then gouges you for $90 to check your first bag at the airport, $110 for the second and $100 per carry-on (round-trip).

Still, many fees can be avoided or minimized. Consumer Reports offers this guide:

Banking. Banks often give you an escape hatch, so use it to save. Avoid ATM withdrawal fees, usually $2 to $3, by using your own bank’s machines or fee-free ATM network. Or tap the cash-back features many supermarkets offer when you pay by debit card.

Avoid big-bank checking fees of $8 to $15 per month by signing up for direct deposit, maintaining minimum balances or switching to a credit union, community bank or branchless online or smartphone virtual bank, where free checking is more common.

Credit. It’s easy to avoid $65 to $495 in credit card annual fees because only 5 percent of credit cards have them; shop for no-fee, low-interest-rate options at bankrate.com. Stop overlimit fees by contacting your card issuer to opt out of plans that let you charge beyond your credit limit.

Knowing your consumer rights is the key to fee-zapping here. There’s almost no need to pay $12 to $17 in credit report fees, because you can get a free copy once per year from each of the three big credit bureaus — Equifax, Experian and TransUnion — at annualcreditreport.com.

You can deal with a variety of mortgage fees by asking the lender to explain them, then negotiating to reduce or eliminate them. Those include prepayment fees, origination fees and various document fees.

Investing. Never pay a mutual fund sales fee, or “load,” which can be a whopping 3 percent to 8.5 percent of the amount you pay for fund shares; buy only true “no load” funds. Reduce management fees that can tax your balances by as much as 1.5 percent every year, which hurts long-term returns, by shopping for stock funds with fees below 1 percent and index funds with fees below 0.4 percent.

Stay away from variable annuities and the mortality and expense risk charges they come with. Annuities are overpriced, and it’s hard to comparison shop to begin with. But such charges cost 1.25 percent of the annuity’s asset value every year to insure the insurer in case you live longer than their calculations supposed.

Travel. Sidestep airline telephone booking fees of $25 to $35 per ticket by reserving and buying online. Include baggage fees to compare the true cost of low-fare come-ons, and consider two carriers highly rated by Consumer Reports’ readers that let you check one bag (JetBlue) or two bags (Southwest) free on domestic flights.

Autos. The additional dealer markup, often found on new or high-demand models, can be made to hit the road if you threaten to bail on the deal or simply wait until that hot model cools down. And let the salesman know that because manufacturers pay dealers to remove coatings and coverings that protect vehicles during shipping, you won’t be paying that dealer prep fee.

2014 Consumers Union Inc.