If U.S. adults thought they’re paying too much on household bills, it’s time to think again. So-called "hidden" household bills are adding to the debt burden, and at high expense levels.
According to a new report from bill payment services company doxo, hidden costs associated with paying bills amount to $156 billion annually, averaging $1,222 per household.
“Economic uncertainty makes it more important than ever to manage and minimize the hidden costs of bill pay,” Steve Shivers, co-founder and CEO at doxo, said in a statement. “American households are spending over $5 trillion a year on bills, and nearly $156 billion of that goes to fees, fraud, and credit impacts that might have. These are avoidable expenses, and the complexity of today's bill pay experience is what's driving them.”
One big problem that doesn’t help bill payers is that the current bill-pay market is designed primarily around the needs of billers rather than those of heads of households tasked with paying those bills.
“Instead of offering a simple, all-in-one experience that empowers the consumer, the traditional bill pay experience requires consumers to understand and navigate each biller’s individual policies and penalties, manage multiple logins, share payment account information across different platforms, and keep track of individual due dates,” the report noted.
Here Are the Biggest Hidden Household Bills
Some hidden bills can really damage a household’s budget. In particular, these three shaded consumer expenses need to be identified and remedied.Credit card interest
Many people don't realize just how much they're wasting on interest charges each month by carrying a revolving balance on their household credit card. “Considering the average household credit card balance is hovering between $6,500 to $6,700,” Andrea Woroch, personal finance analyst at Andreaworoch.com, told NTD News. “With the average credit card interest rate between 19.20 to 22.8 percent, wasteful fees can quickly add up and drain consumer budgets without many realizing it, causing this to be one of the biggest hidden household bills.”The best thing you can do is pay as much as possible (or double to triple the minimum due) to pay down this debt faster.
Woroch advises contacting your credit card company to negotiate the rate, as it’s common for card companies to do so. “You can also use a balance transfer card to move your debt to a new card offering 0% interest on new balances for up to 21 months,” Woroch said. “This means your payment will go towards reducing your actual principal balance, so nothing is wasted on interest, helping you get out of debt faster.”
Grocery Impulse Purchases
Americans waste approximately 40 percent of the food they buy, with a higher share of perishable foods going to waste. “Making a meal plan, using groceries that you have at home, shopping with a list, and comparing store ads are great ways to reduce food waste while reducing your monthly grocery spend too,” Woroch noted.Consumers can also rack up rewards on grocery purchases to earn something back on necessary purchases. “That also includes signing up for free loyalty programs, using a robust cash back card that gives you more money back at the grocery store,” Woroch advises. “Make sure to snap digital photos of your receipts to earn points redeemable for gift cards to Amazon, Target, and more to offset future food spending.”
Digital subscriptions
According to DepositAccounts.com, adjusted for inflation, digital subscription costs have risen 19.0 percent since 2020. Digital subscription prices have grown significantly in the past six years. “The cost to subscribe to 15 popular services, from Netflix to Spotify to Zoom Pro, totals $237 a month today, up 19 percent from an inflation-adjusted $199 in 2020,” the company stated in a recent report. “If you don’t adjust for inflation, the increase is a far more significant 49 percent from $159.”Many consumers think of TV streaming when they consider subscription costs, but total costs can also include computer software, apps, media platforms, meal kits, fitness services, and home management services. “To fight back, look for introductory offers that have expired or find a better rate by switching services, or decide the full price isn’t worth it and cut it,” Alana Dangelica, founder at Alana D'Angelica Coaching & Consulting, told NTD.
Late fees
The doxo report noted that consumers pay $248 in late fees annually. Those costs come directly from missing a bill or paying it late, and 35 percent of households reported incurring one or more late fees.Agreeing to pay household bills on a specific date and having the cost automatically deducted from your bank account can help minimize late fees. Additionally, try regularly padding your account with extra money to cover deductions, or have your bank link your checking account to an overdraft line of credit, savings account, or credit card to cover any surprise overdrafts.
Don’t Wait To Address Hidden Bills Issues
Dangelica believes that since most Americans have hidden bill issues, taking a holistic approach to household bill management is a good idea, and the sooner the better.“The real issue is making sure you’re meeting your savings goals,” she noted. “If not, it's a good time to do a thorough budget review and determine where bills could be reduced or cut.”
The views and opinions expressed are those of the interviewees. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.