Expense Creep: How to Avoid Getting Nickel-and-Dimed on the Essentials

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Have you ever noticed how certain expenses slowly creep up while your pay usually stays flat? Most of the time, it’s hard to even find the source of the escalation. Consumers tend to get alarmed by sharp jumps in prices and are spurred to act only when a single increase is large enough to offend. But by 1 percent here and $2 there, it seems like certain items and services are always on the uptick, flying just low enough to go unnoticed by our budget radars.

It’s a curious phenomenon that warrants a bit of sleuthing. Which are the primary culprits in this gradual, death-by-a-thousand-cuts expense escalation? And, perhaps more importantly, what can consumers do about it individually and collectively?

If you’re tired of being nickel-and-dimed without so much as a head nod or a thank you, it’s time to sharpen your focus. Here are the products and services most likely to drain your coffers one drop at a time.

1. Cable TV and Internet rates

Few things in modern life arouse more profound confusion and red-faced frustration than cable TV and Internet services. Different Internet connection speed options, cable companies with ever-changing participating networks, and temporary premium channel promotions — it’s enough to make anyone long for the good old days when the only choices were CBS, NBC, ABC and PBS.

Consumers have to develop hawk-like vision to not only read the fine print on Internet and cable TV contracts, but to understand the fluid terms and conditions that seem to be the hallmark of so many cable TV and Internet providers. There’s no magic bullet to keep this particular expense from creeping northward. The best strategy is to monitor your monthly invoices closely for billing errors, understand all your charges and why they’re applied (and when you don’t understand, call to get answers), and take advantage of free promotions only if you’re disciplined enough to proactively cancel them before you get hit with an automatic charge.

2. Credit card annual fees

Do you read every communication your credit card company sends you? I don’t. Usually, I only pay attention to my monthly statements and, I’m embarrassed to say, I’ve missed new annual fee announcements more than once. Pay close attention when your previously free credit card imposes an annual fee or when that introductory offer on your card ends. Even though some fees entitle cardholders to nice extras like travel insurance, rewards points, or free upgrades at hotels, I try to avoid them . Annual fees tend to offer far more advantages to card issuers than they ever do to cardholders.

If an annual fee pops up on your card, don’t be afraid to call and flex a bit of consumer muscle. Sometimes card companies will waive the fee for one year or for the lifetime of your account if you threaten to cancel. It makes sense: Continuing to pull in 12 percent to 19 percent in interest from a creditworthy customer is worth forgoing an $80 annual fee. For more information on credit card fees and strategies for avoiding them, check out this piece on Finance For Yuppies.

3. ATM fees and other bank charges

If you’re unfortunate enough to need cash when you’re away from your bank-affiliated ATM, you’ll more than likely incur two separate fees — one from the issuing bank and one from your own bank. These fees are subject to change (read: increase) from both ends and can range from $2 to $4 per transaction.

If you’re a longtime customer at your bank, don’t often access cash at nonaffiliated locations, and don’t mind making a couple of calls, at least one side of the charge might be refunded. Also, some banks offer fee-free transactions regardless of the ATM you use. This privilege is typically reserved for premium account holders; check with your bank to see if it offers such a benefit.

4. Health insurance rates and copays

Though health insurance costs rose just 4.1 percent for employers in 2012, most businesses still struggle to provide affordable coverage to their workers. To help share the burden, companies choose plans with higher copays or require employees to pay a larger share of the premiums. As costs slowly creep higher, our paychecks get smaller in a cycle that’s hard to avoid.

Consumers can help balance cost increases in a couple of ways. First, leverage pretax medical savings account funds to help cover copays. Second, try to schedule medical procedures to take full advantage of coverage once your annual deductible has been reached.

5. Shrinking value for your dollar

One of my favorite sites, Consumerist.com, has a recurring content feature dubbed Grocery Shrink Ray. “Shrink ray” refers to products that get repackaged and, in the process, get a slight quantity reduction. From cereal to toilet paper and from chili to sunscreen, a fancy new label can sometimes mean a few trimmed ounces.

I include the shrink ray phenomenon here because a gradual reduction in what consumers get for their money equals a gradual increase in their expenses. Buyers can push back by learning what products are involved, sharing that information with friends and family, and contacting manufacturers to express their displeasure.

Knowing what to look for is half the battle in beating back expense creep. Most consumers slip into autopilot when it’s time to pay the monthly bills and only notice major changes in prices, not the minor tweaks that eventually add up. With these types of charges, vigilance wins — paying close attention to all charges, asking questions, pushing back, and being willing to take a stand and cancel services when the occasion calls for it are all strategies that can keep expense creep at bay.

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