In a year of skyrocketing inflation, the last thing consumers want is to pay extra for hidden costs stuck inside their bills. But that’s what’s happening — to the tune of nearly $1,000 a year per household, according to a new report from mobile pay service Doxo.
The report, titled “The Hidden Costs of Bill Pay — 2022,” found that each year, U.S. households spend more than $4.6 trillion on household bills and $3.3 trillion on the 10 most common recurring bills. Hidden bill-pay costs — typically involving identity fraud, late fees, overdraft fees and negative credit impacts — amounted to an additional $128 billion a year for an average of $986 per household. That’s up from $925 per household in the 2021 report.
“Hidden bill-pay costs like identity fraud, detrimental credit impacts, late fees and overdraft fees are a major avoidable expense for many consumers,” Jim Kreyenhagen, Doxo’s VP of Marketing and Consumer Services, said in a press release.
An analysis of consumer survey and statistical data found that the hidden bill costs break down as follows:
- $54 in identity fraud costs: These are only the direct costs and don’t include the time and expense consumers spend restoring and repairing their identity records after they’ve been compromised. The total is more than double last year’s average of $26 per household.
- $119 in overdraft fees: Bill payments are the primary cause of bank overdrafts, according to the survey. The $119 average is up from $97 the previous year.
- $155 in late fees: Missing or paying a bill late often incurs late fees, and 32% of U.S. households reported incurring one or more late fees. This year’s cost is up from $119 per household last year.
- $658 in added costs of credit: Late and missed payments on loans, credit cards and other bills can ding your credit score and lead to higher interest rates. Doxo’s analysis found that staying ahead on payments and improving your credit score by 35 points can save the average household $658 per year in interest expense. The average U.S. household carries more than $96,000 in revolving debt — mainly involving mortgages, auto loans and credit cards. Boosting your credit score and qualifying for lower interest rates significantly reduces expenses. GOBankingRates recently offered tips for increasing your score quickly.
Nearly three-quarters (71%) of respondents in the Doxo survey said they are concerned about late fees, while 59% worry about overdraft fees. The vast majority — more than eight in 10 — are concerned about the impact of bills on their credit score (86%), having payment account information stolen (85%), or identify theft when managing online accounts (84%).
A separate analysis from Doxo released in October found that the typical U.S. household spends just more than $24,000 a year on 10 bill categories.
More From GOBankingRates