Insights » Hidden Cost of Bills 2021 Report

Hidden Fees on Bill Payments Cost the Average Household $925 in 2021

person holding a credit card in front of laptop

Keeping up with bills can be a challenge, especially as the economy recovers from the COVID-19 pandemic. Often, households end up spending more money than necessary when paying bills because of hidden costs like late fees, overdraft fees, costs of credit, and identity fraud.

The Hidden Costs of Bill Pay 2021 report, original research from doxoINSIGHTS, breaks down the amount that households pay in these hidden fees. These costs amounted to average expenses of $925 per US household in 2021.

At 12 pages long, the report shows how the $925 per household figure breaks down, demonstrating which costs hit American families the hardest.

The Hidden Costs of Bill Pay report, like last year’s, draws on a mixture of original doxo data and authoritative sources like the Federal Reserve, the CFPB, and the FTC. Below, see highlights from the report.

US households spent $119 billion on the hidden costs of bill pay in 2021

doxo analysis shows the actual consumer cost of the four major hidden costs of bill pay: credit costs, late fees, overdraft fees, and identity fraud.

These costs add up to an additional $119 billion in household expenses each year:

  • $88 billion of detrimental credit impacts
  • $15 billion of biller late fees and penalties
  • $12 billion of bank overdraft fees
  • $3.3 billion of identity fraud

The report also breaks down the level of concern among consumers about these four issues, the frequency of such events occurring, the average cost per year to impacted households (only those households who had experienced at least one incidence of a given cost), and the average financial cost across all households. Adding up the figures in the latter category yields a total of $925 that the average household pays on these four hidden costs.

See the breakdown in the table below:

CategoryPercent of Households with 1+ EventConsumer ConcernAverage Cost per Year to Impacted HouseholdAverage Direct Financial Cost per Household
Credit Cost (35 point change)100%84%$684$684
Late fees38%68%$313$119
Bank Overdrafts30%60%$322$97
Identity Fraud6%83%$454$26

38% of households paid a late fee in 2021

A substantial percentage of households have borne hidden fees when paying bills. Of households surveyed, 38% reported paying at least one instance of a late fee in the past year, with some potentially impacting their credit score. 30% of households report paying one or more overdraft fees. While 6% report an identity fraud event, a far larger percentage of consumers are impacted by theft of personal data through business data losses each year.

84% of households are concerned with stolen payment information

A majority of American households are concerned about the hidden costs of bill pay. Stolen payment information and detrimental impact to credit score emerge as the most common concerns, affecting 84% of US households. Identity fraud came in a close second, at 83%. Of lesser, but still significant concern were late fees and overdraft fees.

Below, see the degree to which households’ concerns about the hidden costs of bill pay have changed since last year.

38% of households are more concerned about identity fraud than they were in 2020

For many households, concerns about bill payments have only mounted during the past year. The largest spike was in concern about identity fraud: 38% of surveyed households were more concerned about it than they were last year. Other mounting concerns were stolen payment information (35%), impact to credit score (31%), and paying late fees (24%).

2020 comparison: US households spent $45 billion more on hidden bill costs than last year

The annual market footprint of hidden bill costs increased substantially in 2021. Last year’s Hidden Costs of Bill Pay Report showed that the four categories of Credit Costs, Late Fees, Overdraft Fees and Identity Fraud cost US households $74 billion in 2020. This year’s $119 billion marks a significant increase of $45 billion.

A more than doubling of the impact of detrimental credit costs was the driving factor behind this spike. While households paid $39 billion because of these costs in 2020, they paid $88 billion for them in 2021.

Per household, the sharp increase in the costs of poor credit was due to a widening of the gap in average APR rates between people with high and low credit scores. While the financial benefit of having a 35-point credit score bump was $301 in 2020, it rose to $684 in 2021.

Read the full report to see how the additional costs of credit break down by category, specifically in carrying a mortgage, auto loan, or credit card balance.

The Effect of COVID-19 on bill payments

The COVID-19 pandemic of past year and half has taken a financial toll on many households. When it comes to the hidden costs of bill payments, this affected the categories of identity fraud and costs of credit most dramatically. There were almost 1.4 million cases of identity fraud reported in 2020. The pandemic was a major driver of this wave: Americans have filed over half a million cases of COVID-19 fraud and counting.

The detrimental costs to credit also increased during the pandemic. This was most likely due to the higher unemployment rate and overall industry concern that those with low credit scores may not be able to service their debt. For example, the charge off rate for credit cards in 2020 climbed over 4%, the highest it has been in almost a decade. While the federal government substantially decreased interest rates in 2020 due to concerns over a sluggish economy, and the general credit industry responded with lower rates overall, the gap between the rates that a prime credit score received as compared to a sub-prime credit score widened in all three major lending categories: auto, mortgage, and credit card.

The pandemic has also impacted bill payments for households in other ways. For instance, recent research from doxo showed how the rise in remote work also led to elevated household expenses in certain key bill categories, specifically Utilities, Cable & Internet, and Mobile Phone.

Hidden Costs of Bill Pay in 2021

A comprehensive analysis of the four hidden costs of bill pay that affect consumers: late fees, overdraft fees, identity fraud, and detrimental costs of credit.