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Exposing Hidden Fees - They Are Everywhere!
Authored By: Community Focus FCU on 9/15/2020

Exposing Fees

Undisclosed and deceptive fees are becoming commonplace and end up costing American consumers billions of dollars each year. According to a report by the Consumer Federation of America, hidden and additional fees can increase bills by up to 25%.

Companies may choose to hide the true cost of a product or service through fees—often added at the very end of the purchase process—so they can appear to be the lowest-price provider in a competitive marketplace. When, say, an airline service disguises part of a ticket’s cost as fees, the true and total cost may not be picked up by online shopping engines, showing you a much lower price. Industries notorious for hiding fees include shipping, airlines, non–credit union banking services, cable providers, car rental agencies and dealers, hotels and resorts, phone providers, medical services, and retirement funds.

Types of hidden fees and fee pricing

  1. Drip pricing. This fee tactic slowly accumulates costs as you progress through check out. A company might lure you to a product with a super-low price, but once you hit the “purchase” button, additional options (some of which are unavoidable, like a charge for the color of the item), upsells, tax, and shipping and handling costs will slowly push that price up.
      
  2. Default upgrades. This often happens with bargain-basement travel deals with airlines, hotels, and car rental companies. The seller has boxes automatically ticked for product, service, or shipping upgrades by default. If you don’t go through and uncheck each box, you’ll pay a much higher-than-advertised price.
      
  3. A surcharge. This is an additional fee that is usually higher than what you could pay for the item or action on your own. For example, the fuel surcharge from a car rental company.
      
  4. Transaction fee. These are simply for the act of fulfilling an order, like for an online concert ticket purchase.
      
  5. Undisclosed/Hidden fee. These are the fees that you weren’t told about or able to discover on your own. These can be legal or illegal. They are considered illegal if they or the quoted price was deceptive, fraudulent, or the result of false advertising.
      
  6. Excessive costing. You might know this scheme as the claim “You only pay shipping!” A company will sell you an item “for free” and you only have to pay shipping and handling fees—but of course those fees are inflated. This is how the company covers manufacturing costs and generates a profit.

Examples

Here’s where you’re most likely to find hidden fees:

  1. Hotels. Today, hotels often charge “resort fees” to cover items that you might expect to be a part of your basic hotel price and experience. Resort fees can run $10 to $100 per night. They usually cover your room’s “free” wifi, “complimentary” bottled water or coffee, access to the gym and swimming pool, towels, housekeeping service, the “included” breakfast, the safe in your room, and potentially other items and services. Ask about resort fees before you book your next hotel room and ask if any of them can be removed (like the one for a safe in your room if you don’t need it).
      
  2. Car rentals. Be sure you look for these fees and charges before deciding which company truly offers the best deal: additional insurance, age surcharge, additional driver fees, overcharged toll feels, fuel charges, drop-off fees, mileage fees.
      
  3. Car dealerships. These might be some of the most well-known fees, which are added to the sale price before you sign documents and drive off the lot: advertising, documentation, dealer prep, inventory, and delivery fees, as well as extended warranties. Many of these can be negotiated.
      
  4. Phone service. Beware of “cramming”—adding fees to your phone bill for services you didn’t sign up for. They’re often small-amount fees, but they add up over time. They can include voicemail, mail server, membership, minimum monthly usage, premium text message, or simply “other” fees. These aren’t always illegal, but you have the right to contact your phone company and ask to cancel or negotiate a better deal.
      
  5. Modem fee. Many internet providers charge broadband customers a monthly fee to rent a modem. You can avoid this by purchasing your own. It will most likely pay for itself in less than a year!
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When is it better to use a Debit Card?
Authored By: Community Focus FCU on 9/4/2020

Debit Card or Credit Card

“Debit or credit?”

It’s a question you probably hear every time you buy something in person. If you have the option of using either a debit or a credit card, is there a reason you choose one card over the other? Is there ever a wrong choice between the two?

There could be, depending on your situation.

How your cards work

It’s first important to understand how the two types of cards work.

Debit cards draw money straight from your checking account. You won’t get a bill later or pay interest on what you spend, but you could pay an overdraft fee if you spend more than what you have in your account. A debit card also allows you to get cash from an ATM, drawn from whichever account you choose (checking or saving).

Credit cards allow you to borrow money that must be repaid, with interest if you don’t pay your entire credit card bill when it comes due. You will have a credit limit on each credit card—the maximum amount of money you can charge to a card, but it will likely be much more than you have in your checking account.

Credit cards have many perks, like fraud prevention, helping you build credit, earning perks (like cash back or airline miles), extended warranties on electronics, and additional insurance on air travel or car rentals.

If someone steals your debit card information and withdraws money from your account, there’s a good chance that money is gone forever, although your credit union may offer additional protection up to a certain dollar amount. However, with a credit card, you are protected against fraudulent charges by federal law, and you can dispute any charges by dishonest sellers.

Even with all of the advantages of using a credit card, there are times when it might be smarter for you to use your debit card.

If using a credit card incurs a fee

It’s not uncommon for a surcharge to be added to your bill if you use a credit card. Examples include using a credit card to get money out at an ATM, to pay taxes, or to pay a tuition bill.

If you’re buying from a small business

Businesses must pay a credit card processing company money to offer credit cards as an accepted form of payment. To help offset this cost, the store may set a credit card minimum, ensuring you spend enough to make the credit card charge worth it. Using your debit card when shopping from small, local businesses helps the business keep more of the profit, helps keep you from overspending to meet that purchase minimum, and helps prevent the business from increasing its overall prices to compensate for the credit card processing fee.

If you’re in credit card debt

If you’re currently facing deep consumer debt on your credit cards, or have only recently paid off your credit card debt, or struggle to resist spending beyond your means, you should be reaching for your debit card more than a credit card.

When you run out of money in your checking account, your credit union won’t let you spend any more! It’s a natural prevention to overspending!

Summary

An easy way to decide which card to use in the moment is to match the card type to your goal.

If you’re avoiding debt, use your debit card.

If you’re trying to build credit and can pay off your bill each month, use a credit card.

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COVID-19 Fraud Scams
Authored By: Community Focus FCU on 8/31/2020

Fraud and Scams

The recent COVID-19 pandemic has resulted in large numbers of unemployment filings. Unfortunately, many agencies are also reporting an increased number of unemployment scams in which victims’ identities are being used to file false unemployment claims. Victims, who have not filed unemployment claims, are receiving notification from their employer’s Human Resources department, or the Unemployment Insurance Agency indicating an unemployment claim has been filed on their behalf. Unemployment Insurance Agency is recommending the following steps for anyone who knows or believes that they are a victim:

Steps to report fraud and identity theft

1. Contact Human Resources – reach out to your HR department to coordinate and report the incident to your employer.

2. Report the fraud to the Unemployment Insurance Agency fraud unit in your state 

3. Get a free credit report and place a fraud alert– contact one of the credit report bureaus: Equifax, Experian, or TransUnion at www.annualcreditreport.com or call 1-877-322-8228. Report that the fraudulent claim was made using your identity. You can then put a free fraud alert on your identity with one or more of the credit report bureaus or freeze your credit. Find more information about freezing your credit here.

4. Contact the IRS – if it is confirmed that a payment has been made as a result of unemployment identity theft, report the payment as fraudulent by completing an IRS Affidavit Form 14039 (Search Forms and Instructions).

How to protect yourself from becoming an identity theft victim

  • Guard your Social Security Number. Give out your number when absolutely necessary and don’t carry your Social Security Number card with you.
  • Don’t respond to unsolicited requests for personal information (your name, birthdate, Social Security Number, or bank account number) by phone, mail or online
  • Shred receipts, credit offers, account statements, and expired cards, to prevent “dumpster divers” from getting your personal information
  • Review your credit report at least once a year at www.annualcreditreport.com to be certain that it doesn’t include accounts that you have not opened.

How can Community Focus FCU help you in preventing identity theft and fraud?

  • Sign up for e-Statements in Online Banking to reduce the chances of becoming an identity theft victim through mailed account statement
  • Sign up for SavvyMoney in Online Banking to view changes to your your credit report 24/7. If you see any fraudulent or unknown accounts, you can easily dispute your report via the Dispute Report button within SavvyMoney.
  • Sign up for MobiMoney and get instantaneous notifications anytime your Debit Card is used 
  • Set up E-Alerts in Online Banking and get updates on your balances, transactions, unauthorized logins or upcoming loan payments

For more information on the Unemployment Insurance Agency fraud, please visit the Unemployment Insurance Agency's website.

To learn more about identity theft and fraud prevention tips, please click here

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Don't Forget to Ask These Questions When Buying a New Car
Authored By: Community Focus FCU on 8/28/2020
Buying a new car
There are many questions you’ll be asking yourself, the dealership sales associate, and probably car review websites before you decide to buy a new vehicle—but here are six questions you should ask before signing any purchase papers. These questions should be your “deal testers,” a way for you to verify the purchase terms, understand all the fees, and ultimately decide if further negotiation is needed.


"What's my out-the-door price?" or “What other fees will I be charged?”

Usually, up to the point of signing the vehicle purchase contract, you’ve only been discussing and negotiating the price of the car. However, there are always additional fees to pay—some legitimate and unavoidable, others questionable or negotiable. Fees to expect include sales tax, registry and new license costs, tire recycling fees, and a documentation fee.

“How much is your documentation fee?”

All car dealers charge a documentation ("doc") fee for filling out the contract to buy a new car. As ridiculous as it may sound, it’s a universal fee charged by all dealerships. Doc fee rates vary state by state. Some states cap the doc fee, usually at a price under $200. Other states don't regulate the fee at all, so it can be $500 or more. If you live in a state without a capped fee and feel the fee is too high, your best bet is to negotiate the price of the car down to compensate for the high doc fee, rather than try to get the dealer to waive the fee altogether.


“Are there any dealer-installed options on the vehicle?”

Dealers often add options to new vehicles after they receive them from the factory. Options added by dealers are called “add-ons” and the markup can be steep to boost dealership revenue. Add-ons can include nitrogen-filled tires, LoJack car recovery system, window tinting, wheel locks, all-weather floor mats, paint protection, and others. Dealers will sometimes install an add-on to all new cars in their inventory to make it appear as if it’s a standard feature. But, if you know it’s not a standard feature, you won’t be tricked into paying for an add-on you don’t want. Because the mark-up for the feature is set by the dealer, its price can be negotiated by a savvy buyer.


“What tax credits are available for this vehicle?”

If you’re considering buying a new fuel-efficient hybrid or electric vehicle, you may be eligible for a federal tax credit. But did you know there are other tax credits that may be available for other types of vehicles? Researching this question before you get to the dealership, as well as asking the sales associate, will give you more information when trying to calculate the final take-home price of a vehicle.


“How many miles are on the vehicle?”

This question is important for both internet and in-town shoppers. Even a brand new never-been-owned car can have more miles on the odometer than expected, which may change how much you’re willing to pay for it. Perhaps the vehicle has been taken on a lot of test drives, or it's a "dealer trade” and was driven from one dealership to another. As a general rule, if there are more than 300 miles on a car, you should negotiate a lower price if it isn’t already marked down. For any new car that has higher mileage or has been on the lot for a while, ask to see the “in-service date.” This is the date when the factory warranty begins, and it’s important to know if some of that time has already elapsed before you purchase it.


“Can you deliver the car?”

This question applies primarily to internet shoppers. Delivery of your new car is a great last perk to negotiate that saves you time and gas. Vehicle delivery also has the added benefit of allowing you to skip the sales pitches from the finance and insurance manager at the dealership for extended warranties and additional services. If you do want one of these extras, you always have the option of speaking with the appropriate manager over the phone.
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