Understanding The High Cost of Hidden Fees

Tapping your card or clicking “Confirm Purchase” has never been easier, but those simple actions can come with hidden costs. The Federal Reserve’s Annual Diary of Consumer Payment Choice reveals credit and debit cards account for nearly two-thirds of all consumer payments. Yet behind every transaction are fees that can quietly inflate what you actually pay.

In May 2025, the Federal Trade Commission took steps to make pricing more transparent by banning “bait-and-switch” tactics that hide extra fees. For now, the rule only applies to hotels, vacation rentals, and live-event ticket sellers, but it highlights growing scrutiny around hidden costs across industries. For other businesses, adding fees to credit card transactions is often seen as a way to offset the costs of doing business. In an environment where extra fees are unlikely to disappear any time soon, it’s important to be aware of the true cost of your purchases.

Surcharges

Surcharges can lump several types of fees together that businesses must pay to banks or credit card processors. It’s typically only reflected as a single charge on your receipt. These added costs can include processing fees, the cost of a business accepting credit cards as a form of payment, security measures covering the transactions, and network fees, paid to each credit card network the business accepts.

Surcharges can only be applied to credit card transactions, not debit cards or prepaid cards. They must be clearly stated on a receipt. Typically, these cost about one to four percent of the total transaction, but the business isn’t able to charge anything on top of that fee as part of a processing surcharge.

Convenience fees

These fees vary depending on the credit card network, each of which has its own rules about what kind of purchase can incur a convenience fee. These are often confused with surcharges, but rather than a percentage of the transaction, the convenience fee is a flat amount.

As a way to counteract having to apply fees to credit card transactions, some businesses will require a minimum purchase amount for credit cards, typically beginning at $10. This can affect consumers both positively and negatively. While it does allow you to avoid hidden fees, if you don’t have cash or a debit card on-hand, you can end up spending more than you planned in order to meet the minimum threshold, which can negatively impact your budget.

Shipping fees

Shipping fees are notoriously variable and often hidden from consumers until much later in the checkout or transaction process. This can cause the cost of a purchase to jump significantly, so it’s smart to estimate an additional five to 15 percent to your online purchase to cover domestic shipping, and even higher for international shipping.

If you do find somewhere that offers free shipping, check for any terms and conditions; often, free shipping requires a minimum purchase amount, which in some cases can negate its benefit.

Payment fees

Outside of everyday transactions, there can also be costs associated with having a specific credit card, like an annual fee, or charges if you lose your credit card. While most cards have a hard limit for what you spend, if you exceed that number, some will charge additional fees and others will charge if payment is returned due to insufficient funds.

When it comes time to pay your bill at the end of the month, it’s important to account interest charges into your budget. If you are carrying a balance over from month to month, a small-dollar item can quickly become pricier. And if you miss your payment, that cost can rise.

Understand the true price tag

Hidden fees may be here to stay, but awareness is your best defense. By choosing the right payment method for each purchase and building smart budgeting habits, you can keep more of your money where it belongs – with you. At WSFS, we offer a variety of options to help you with your financial journey, discover which product is right for you by going to our website or visiting one of our banking offices to talk with an Associates.