Are “Convenience Fees” Just Another Way Companies Nickel-and-Dime Consumers?

It didn’t take long for companies to realize they could save a lot of money on personnel and supplies by eliminating paper bills and accepting online payments. For the most part, this has been a good thing for consumers. Paperless bills are generally more efficient for everyone, and online payment is really convenient.

To encourage this transition, many companies started charging for paper bills. In general, nobody cared. Paperless bills are more convenient for just about everyone, and it’s pretty obvious that sending paper bills costs more (even if it doesn’t exactly match up with what the companies charge). Paperless billing goes hand-in-hand with online payment, but companies really don’t like merchant transaction fees, and companies really want you to sign up for automatic payments, so many companies are using the same tactic to “encourage” customers to sign up for auto-billing, or else to use transaction-fee-free payment methods.

Verizon is the latest to introduce a “convenience fee” for online payment, although it’s a little embarrassing, since it comes right on the heels of its third data outage this year.

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Why the CARD Act is Good for Consumers

The market works well when everyone understands what they are buying and selling. But credit cards are complicated financial products. Few consumers can make an intelligent comparison of one card to another. That is a big part of why credit card companies have gotten away with charging ridiculous fees, double-cycle billing, and other transgressions over the years. Nobody knows what they are, and there may not be alternatives, anyway.

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Big Banks Targeting Consumers for Overdraft Fees

Hot on the heels of yesterday’s post about how big banks are digging their own graves with their incessant nickel-and-diming and bad service comes this bank news: “Regulation E offers aggressive bank marketers opportunities to maintain or even increase revenues from their overdraft programs.”

That’s right. Instead of acknowledging that consumers don’t want to get screwed when they use their cards, banks are strategizing how to increase revenue from NSF fees. Maybe it is time to look for an online bank, after all.

Overdrafts Generate Big Bucks For Banks

An estimated 45% of the country’s banks make more from overdraft fees than they do from credit card fees(!). They will generate $27 billion in covering overdrafts on checking accounts this year. Proposed legislation, however, may at least put in dent in that healthy source of bank revenue.

A 2008 FDIC study estimates that 41% of banks have automated overdraft programs, and a robust 77% of large banks have such programs. The FDIC also estimates that 93% of overdraft charges come from 14% of bank customers.

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NWA starts charging today for first checked bag

Delta is Ready with New Fees for Frequent Fliers

AT&T and others make you pay for the privilege of paying your bill

Want to pay your wireless bill in an AT&T store? That’ll be $2 extra for the “privilege” of handing it to a clerk. Want to pay your credit card bill over the phone? That will be $15.

The disparate impact of policies designed to discourage consumers from paying in cash–like the AT&T’s in-store charge–falls squarely on the poor, many of whom do not have bank accounts. (Bank accounts are not particularly useful if you never have any money to keep in them.) AT&T says the poor should just suck it up and get pay-as-you-go phones.

But these policies are also an indication of how many companies really make their money these days: not from providing the service they purport to provide, but by nickel-and-diming customers with fees at every turn. Heck, some credit card companies have chucked all but the pretense of lending money and turned entirely to generating fees.

Maybe AT&T was just frustrated with its customers who paid their bills on time, and decided this was a good way to squeeze a bit more money out of them, too.

[crosspost: Consumerist]