Widespread Consequences of Junk Fees Uncovered, With Financial Transactions Showing Most Impact on Americans

Research reveals more than half of Americans say junk fees are negatively affecting their financial and emotional well-being, and nearly three-quarters say junk fees are a key issue in upcoming elections

January 23, 2024, NEW YORK, NY — As political efforts intensify to combat junk fees across various sectors, a groundbreaking study conducted by Wise, the global technology company building the best way to move and manage money internationally, unveils a hidden landscape of fees plaguing the everyday lives of Americans. This research not only sheds light on the pervasive nature of these junk fees, but also highlights their far-reaching consequences, including how they are altering consumer purchasing habits and eroding trust in financial institutions.

The research, conducted with Morning Consult and surveying 2,000 Americans nationwide, found that Americans are most impacted by a junk or hidden fee included when using a credit card or in financial services. Utility bills, hotels and event tickets also ranked highly as areas where consumers have experienced unexpected fees.

Crucially, junk fees are having emotional and financial consequences on Americans. Over half (56%) of respondents noted junk fees are negatively affecting their financial situations, and 51% reported a negative influence on their emotional well-being. 

“In sharing this impactful research, we hope more decision-makers across the country take note of the harm this is doing to the financial health of average Americans,” said Harsh Sinha, Chief Technology Officer for Wise. “Because junk fees affect consumers’ everyday transactions, many of which involve routine financial services, we must focus efforts on eliminating these fees where they hurt consumers most frequently.”

Junk fees have changed consumers' purchasing habits — and trust 

As the awareness of junk fees grows, Americans are altering their buying habits. A staggering 76% of respondents said junk fees have influenced their decisions about which companies to do business with, and 42% said they have changed or stopped using a specific company or brand due to junk fees. Importantly, trust in the financial services industry is eroding, with 62% expressing reduced confidence in these institutions.

A disturbing junk fees trend: financial transactions and international payments

One crucial area of concern consumers flagged involves junk fees in financial transactions and international payments, integral parts of daily life. Respondents who encountered junk fees in financial transactions cited overdraft fees (79%), missed bill payments (73%), and home-buying costs (75%) as the most financially detrimental. It’s clear financial transactions are where many Americans are feeling hit the hardest when it comes to junk fees.

This extends to international payments and transactions as well. This same group noted negative impacts from sending a payment to someone in another country (70%), receiving a payment from another country (69%), using a credit card in a foreign country (64%) and using a credit/debit card at ATMs in a foreign country (64%).

Having experienced these junk fees, consumers are changing or reconsidering their providers for these services. Sixty-eight percent of consumers will or have changed who they use for international money transfers due to markup on exchange rates after experiencing an unexpected fee.

“It’s no surprise that Americans are worried about junk fees. But while the focus has been on offenders from sparingly used experiences, like hotels or events, what clearly remains unaddressed are unexpected and hidden fees in the financial transactions and international payments consumers undertake daily,” said Sinha. “At Wise, we have been fighting for transparency in international payments, and across financial services, since our founding, because we know how much junk fees have an impact.”

Americans demand action: An election-year imperative

Regarding international payments, whether they send money internationally or not, Americans are aligned — 81% agree that a hidden fee included in a currency exchange transfer (i.e. currency exchange markup) is a junk fee. And given that Americans lost $5.8 billion in hidden exchange rate markups during 2023, it’s imperative that action is taken.

With the 2024 election cycle in full swing, politicians and regulators must take note that Americans want this issue prioritized. Nearly three-quarters (71%) of Americans stated junk fees are impacting how much they want policymakers to prioritize this issue. In fact, 74% of Americans said junk fees are an important issue when determining a candidate to support or vote for.

To read the full Wise Junk Fees report, please visit: https://wise.com/community/junkfees 

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Research methodology

The poll from Morning Consult was conducted between November 2 - November 9, 2023 among a national sample of 2,006 adults. The interviews were conducted online and data were weighted to ensure a nationally representative sample of the U.S. population. Results from the full survey have a margin of error of plus or minus 2 percentage points. Percentages in this report may not add up to 100% due to rounding.

Research for the exchange rate markup fees was conducted by Capital Economics. Capital Economics has estimated the fees on foreign exchange transactions paid by US consumers and small and medium-sized businesses nationally and in every state. The estimates are produced for the years 2018 to 2023 using data from US and international organizations as well as research of the typical transaction fees and exchange rates margins charged in five areas: consumer travel spending abroad, remittances sent from the US, trade in goods and services by small and medium-sized enterprises and portfolio investment earnings abroad.