What to Know About Hidden Fees That Increase the Price of Everything

Farnoosh Torabi Former Editor at Large
Farnoosh Torabi is a financial strategist, host of the award-winning podcast So Money and a bestselling author.
Farnoosh Torabi
6 min read
Smartphone user views credit card charges, with a cup of coffee in the background
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What's happening

Many companies have found ways of passing down increased costs to consumers, with extra charges tacked on to your bill at checkout.

Why it matters

It's called drip pricing, and these new fees and surcharges are affecting customers who are already struggling with rampant inflation.

What's next

Knowing what merchants are charging can help you manage your budget and make better buying decisions.

The prices for nearly everything have ballooned in the past year. Record high inflation means the cost of food, fuel and other everyday essentials has gone up, which has put severe financial pressure on US households, particularly low-income Americans. 

photo of a restaurant receipt with 4% circled: "adds a 4% administrative surcharge to offset employee benefit costs and other operating expenses. This charge is not a gratuity paid to any staff member."

Look out for surcharges like these on your restaurant bills.

Courtney Johnston/CNET

And then there's the hidden costs added to your purchase before checkout, or tacked on to the receipt without warning. 

These additional merchant fees are called drip pricing, and they're inflicting pain on our already-stretched wallets. Businesses often claim these fees are the only way to offset the burden of inflation and supply chain shortages. For consumers, it means the things we buy are pricier than they initially appear. 

"Most of the time we find out about these fees when it's time to pay, not before," Ashley Feinstein Gerstley, author of Financial Adulting, told me via email. "Because these fees really run the gamut, you never really know what you are going to get." 

I asked my Instagram followers about these new and surprising fees, and they gave me loads of anecdotes. From restaurants to medical offices to rideshare services, here's a look at some charges that I discovered. 

And I'll offer tips on how to manage these unexpected surcharges.

Restaurants are charging more, and not just for food

Many restaurants are still reeling from a fiscal slump during the first year of the COVID-19 pandemic. Now, with rising food and payroll costs, eateries continue to struggle. "Average small business restaurants run on very tight margins of around 3 to 5% pre-tax," said Hudson Riehle, senior vice president of research with the National Restaurant Association. "The typical restaurant business model is not set up to deal with this sustained and accelerated cost of food and labor, which is putting extraordinary pressure on operators, and indications are these will continue." 

Here are some of the new fees you may see on your restaurant bill: 

Credit card surcharges

Earlierthis spring, major creditcard companies like Mastercard and Visa increased interchange fees, which is what merchants pay to card issuers every time a customer uses a credit card. Also known as "swipe fees," they cost businesses 1.5 to 3% per transaction. They're most challenging for smaller establishments like restaurants, and some are passing this expense on to customers as a percentage of their total bill. 

When Feinstein Gerstley dined out with her family last summer in Sapphire, North Carolina, the restaurant charged a credit card processing fee that she says was not mentioned until the bill arrived: "We were a party of 15 who had drinks, apps, dinner and dessert so the charge was substantial, over $100." Many states permit businesses to pass on their card swipe fees to customers, but they must properly disclose the surcharges on visible signage and their websites. The customer fee also cannot exceed what the business pays to the credit card companies.

Increased labor costs

Back in April, Sarah Morisson saw a $5 surcharge when the bill for her enchiladas arrived at a restaurant in Alpharetta, Georgia. The reason? "Increased labor costs." This may also be called a "kitchen appreciation fee" in some eateries and comes in the form of an added $3 to $5.

Health care charges

Restaurants are competing for workers and offering more benefits as a draw. This added cost may show up on your receipt next time you eat out. In Chicago last month, Rema Shamon noticed a few dollars added to her dining bill labeled "health care for staff." Similarly in West Hollywood, California, Claudia Scott was charged 3% more for "employee health insurance" at a local eatery. 

Add-ons for staff who don't get tips

At a sandwich shop in Portland, Maine, a couple weeks ago, Jennifer Steralacci and a friend paid a $4 fee "for non-tipped staff" -- and that was on top of the gratuity. "I didn't recall seeing anything on the menu that indicated this charge," Steralacci told me.

Rideshare and food delivery apps are charging more for gas

Fees were already climbing because of the pandemic, but as rideshare companies compete to hire drivers, they're luring them with sign-on bonuses and higher pay. That's another reason your rideshare total seems more expensive than ever. On top of that, in March, Uber and Uber Eats announced a new fuel fee to help drivers cover the cost of rising energy prices. 

That'll cost an additional $0.45 or $0.55 on each Uber trip and either $0.35 or $0.45 on each Uber Eats food order, depending on the location. Uber says 100% of that fee goes to drivers.Rival rideshare companyLyft has also announced a 55-cent fuel surcharge. Grocery delivery app Instacart says it's tacking on a new 40-cent fuel fee, too.

Fees at doctors' offices are adding to the shock, too

Increased supply and materials fees

Keep an eye out for this line-item cost at your next medical visit, which ranges in price. In Dallas, Kelsie Whittington got hit with an unusual $18 "supply fee" after her son's routine pediatrician visit in May. The medical office explained that it was for pricier bed covers, needles, gauze and other equipment. 

With insurance companies slow to issue reimbursements, the clinic was having patients eat the cost. "I was a little shocked at first, then empathetic. I needed to pay for my son's health," Whittington said.

Facility fees

While doctors' offices have been charging facility fees since before the pandemic, patients may not know about them until they receive an itemized bill. According to Consumer Reports, facility fees, which typically cover the cost of maintaining the medical office, urgent care center or clinic that's owned by a hospital, can add hundreds of dollars to a bill... and insurance may only partially cover it.

Watch this: Are We In a Recession Now? And So Many Home Buying Questions

What can you do about all the extra hidden charges?

To minimize the blow of these new fees and surcharges, we need to gather facts and self-advocate. Here are four pieces of advice:

1. Question the fees: We may feel awkward or embarrassed to ask about new and unusual charges. But if a business is not upfront and hasn't disclosed their charges ahead of time, it's within our right to understand and ask questions. We may learn that the fee is justified and we're actually happy to pay it and continue patronizing. In other cases, it may deter us from returning.

2. Ask for a cash discount: Like many gas stations, some restaurants offer cash discounts to help minimize their credit card processing costs. For example, at The Fifth Season restaurant in Port Washington, New York, cash-paying diners receive a 3.5% bill reduction through its Cash Discount Program promoted on the eatery's website. 

Even if not advertised, ask if a business will offer you a cash discount, a win-win for both you and the merchant. I've successfully used this trick at small, independently owned stores, too. 

3. Think twice about using third-party delivery apps: Delivery apps are convenient but they can quickly double the cost of your pizza order after fees, taxes and the suggested 25% tip. Ordering takeout the old-fashioned way by calling the restaurant directly could result in substantial savings. Some eateries may require you to pick up the food, but others may offer free delivery of their own -- just be sure to tip the driver. If you want to stick with third-party deliverers, MealMe helps identify the lowest options by comparing pricing across the board.

4. Vote with your feet: It's our choice where and how to spend, and if paying extra fees is too much to bear, we have the right to walk away and patronize a different business next time. When a restaurant manager refused to remove the surprise credit card surcharge, Feinstein Gerstley said a family member in attendance shared the experience on Yelp. "We definitely didn't return to the restaurant," she said. 

If a charge does not come with any adequate disclosure, the merchant may be in violation of state laws, so consumer advocates recommend filing a complaint with both your credit card issuer and the state attorney general. According to Riehle, "The restaurant industry is very competitive, and operators know that if a consumer's last experience doesn't meet their expectations, they are likely to vote with their feet."