Junk Fees

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Definition of 'Junk Fees'

Junk fees are fees that are charged by financial institutions for services that are either unnecessary or of little value to consumers. These fees can add up quickly, and can cost consumers hundreds or even thousands of dollars each year.

There are many different types of junk fees, but some of the most common include:

* Account maintenance fees: These fees are charged simply for having an account with a financial institution.
* Overdraft fees: These fees are charged when a consumer overdrafts their account, which means they spend more money than they have in their account.
* Late payment fees: These fees are charged when a consumer misses a payment on their loan or credit card bill.
* Foreign transaction fees: These fees are charged when a consumer makes a purchase or withdrawal in a foreign currency.
* ATM fees: These fees are charged when a consumer uses an ATM that is not owned by their financial institution.

Junk fees are a major source of revenue for financial institutions, and they can be very costly for consumers. In 2019, consumers paid an estimated $14 billion in junk fees.

There are a number of things that consumers can do to avoid junk fees. Some of the most important tips include:

* Read your account disclosures carefully. This will help you to identify any junk fees that you may be charged.
* Opt out of overdraft protection. This will prevent your financial institution from charging you an overdraft fee if you overdraw your account.
* Pay your bills on time. This will help you to avoid late payment fees.
* Use a credit card that does not charge foreign transaction fees.
* Use an ATM that is owned by your financial institution.

By following these tips, you can help to avoid junk fees and save money.

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