What's the deal with monthly service charges? Why do they even exist? Understanding why they're on your bills and what they cost you can help you decide whether you want to sit back and continue to pay them or fight against unfair fees. Where do you fall on the spectrum?
Who Charges the Charges?
Who's responsible for those monthly service charges? Who decides that you must pay this cost on top of all your other fees? Obviously, not all your monthly bills include service fees. However, you probably see the amount pop up on your bank statements — banks love asking for more money, to the point where it seems as though they come up with increasingly ridiculous maintenance fees. To be honest, financial institutions are fans of service charges in general. Your credit card is likely another culprit.
Utility companies often slip in money for maintenance and service, particularly the power company. Look at your cable or satellite bill, and you'll probably see a few amounts you don't recognize. Bet you can guess what those are now, can't you?
What's the Purpose?
If you're hard-pressed to figure out what these service fees pay for, then you're not alone. The answer is rather lame, and it's not usually appreciated. Basically, you're paying additional money for human interaction. At the bank, if you have to talk to a teller, sit down with a loan specialist, or visit a notary public, then your service charge is essentially paying for that interaction. With monthly fees on your cable or Internet bill, you're paying for customer service and, likely, equipment.
It's different with the utility companies and similar services. In those cases, you're paying for something more tangible and understandable. The monthly extras on your bill go toward gas and equipment maintenance, as well as service visits. In that case, you're getting what you pay for because you can see it.
Check Out the Ratio
The ratio of your service charge versus your bill differs from place to place. Banks, for example, don't usually charge more than $12 a month, and it's usually more like $8. The rates tend to be flat rather than based on a percentage of how much money you have in your accounts. Conversely, utility companies that charge a monthly fee may base that on your usage or the number of customers it serves.
It's a good idea to identify all your services that take extra money from you every month. Figure out the ratios for yourself to discover just how much cash you lose to all these fees. Don't be afraid to call up the company that's charging you, either. You're a paying customer, and you deserve to know why your monthly bill looks the way it does and where your money goes.
Is It Fair?
Everyone has a different opinion on the subject of monthly service charges. Some people simply don't care. Others are bothered but assume they have no choice but to pay them. Still others are livid at the idea that they must pay for something they can't see and don't use.
Certainly, there are service practices that aren't fair. Say that your monthly gas bill is $30, but the gas company charges a $25 service every month. Suddenly, your bill is nearly twice as high as it should be even though you didn't use $55 worth of gas. That's not right — and with people who live paycheck to paycheck or rely on a fixed income, it can be dangerous.
That's why it pays to talk to every company that asks for additional fees. Find out why. You may not have a choice about paying it, but you can still have a voice and hold the banks and other businesses accountable.
How to Get Out of It
It might surprise you to know that there are opportunities to get rid of service fees. At the bank, it's actually quite easy. Ask if they have checking accounts that don't include a charge and simply switch over. Otherwise, find out if the bank erases the fee when you have a specific amount of money in your savings account. If nothing else, you may want to consider another financial institution for your banking needs. Credit unions rarely ask for monthly fees, for example.
With utility companies, the cable guys, and other services, you might need to get firm. Again, you need to call to find out why you're paying the charge and where it goes. Let them know that you're not happy with the fee and you'd like to get out of paying it. A payment plan might help you, or a monthly budget plan. You never know until you ask.
It doesn't matter that monthly fees don't amount to much. When you don't expect to pay them and when every penny counts, it's an expense you neither need nor want. Have you ever gotten out of paying a service charge?