U.S. households pay $ 925 a year in hidden costs associated with paying bills
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Latest data from doxoINSIGHTS exposes hidden bill paying costs that hurt households’ financial health and amount to more than $ 119 billion in annual consumer spending
SEATTLE – (BUSINESS WIRE) – doxo, the innovative web and mobile bill payment service, today released its latest statistical report doxoINSIGHTS: The Hidden Costs of Bill Billing – 2021. Every year, US households spend over $ 4.4 trillion on household bills, and nearly $ 3 trillion on the 10 most common recurring items. Controlling these bills is the primary determinant of consumers’ financial health. The hidden costs of paying bills – masked by identity fraud, late fees, overdraft fees and negative impacts on credit – add up to an additional $ 119 billion per year, or on average 925 $ per household.
These figures are considerably higher than those in last year’s Hidden Costs of Paying Bills report, which showed that the hidden costs of paying bills had an overall market impact of $ 74 billion and an annual cost. average per household of $ 577. The sharp increase in the cost of hidden charges was due to an increase in the APR rate spread between people with high and low credit scores. While the financial benefit of having a 35-point credit score increase was $ 301 in 2020, it has grown to $ 684 in 2021.
In 2020, the difference in credit costs between prime and subprime credit ratings has increased significantly. This was likely due to the higher unemployment rate and general industry concern that people with low credit scores might not be able to repay their debt. For example, the credit card billing rate in 2020 climbed more than 4%, its highest level in nearly a decade. While the federal government dramatically cut interest rates in 2020 over concerns over a sluggish economy and the credit industry in general has responded with lower rates overall, the spread between the rates received by a blue chip credit rating and those with a risky credit rating has widened. in the 3 main loan categories: automobile, mortgage and credit card.
The doxo report reveals the concerns of American consumers about these hidden costs and quantifies the expenses for the typical American household.
Breakdown of the $ 925 that consumers pay in hidden costs associated with paying household bills:
Analysis of consumer survey and statistical data shows that the average U.S. household incurs $ 925 per year in additional hidden costs associated with paying bills, including:
- $ 26 in identity fraud fees: The total costs of identity fraud reached $ 56 billion in 2020, although much of that spending was absorbed by card issuers and merchants. Even so, the average household still suffers direct losses of $ 26 each year due to identity theft or payment account fraud, totaling $ 3.3 billion, not counting the additional time and expense required to repair the identity. Almost 1.4 million cases of identity theft were reported in 2020. The pandemic has been one of the main drivers of this wave: Americans have filed more than half a million cases of fraud. COVID-19 and have counted.
- $ 97 overdraft fee: Average overdraft fees exceeded $ 24 last year, and bill payments are the leading cause of bank overdrafts. Banks charged consumers more than $ 12 billion in overdraft fees in 2020, or about $ 97 per household.
- $ 119 late fees: Missing or paying a late bill often results in late fees, and 38% of households reported having incurred one or more late fees in the last year. This totaled over $ 15 billion in household spending, or $ 119 per household.
- $ 684 in additional credit costs: Staying up to date on bills and debt payments is a primary factor in building credit. Doxo analysis shows that staying ahead of payments and improving credit scores by 35 points can save the average household $ 684 per year in interest charges. The average American household has over $ 92,000 in revolving debt – between mortgages, auto loans, and credit cards, primarily – so increasing credit and qualifying for lower interest rates dramatically cuts spending.
“Doxo enables consumers to achieve their financial goals while spending less time and effort managing their bills,” said Jim Kreyenhagen, vice president of marketing and consumer services at doxo. “Hidden bill payment fees such as identity fraud, negative credit impacts, late fees and overdraft fees are a major avoidable expense for many consumers. Using a bill payment manager like doxo can help people avoid incurring a per household cost of $ 925 per year on average. This annual cost could otherwise subsidize 9 months of mobile phone bills for the average American household. In addition, doxo’s premium service, doxoPLUS, adds additional benefits to protect consumers from these hidden costs such as identity theft protection, credit score tracking and a no late fee and no charge guarantee. of overdraft.
Strong consumer concern about identity theft and the impact on credit
Consumers are increasingly concerned about the variety of ways they get stuck with spending when managing and paying their bills. The doxo survey of active household bill payers shows:
84% are concerned about the impact of paying bills on their credit score
83% worry about identity theft when managing online accounts
84% fear their payment account information will be stolen
68% are concerned about incurring late fees and penalties
60% are worried about overdrafts on their bank account when paying their bills
doxoPLUS tackles the hidden costs of paying bills
Doxo’s secure, all-in-one bill payment service facilitates secure payment to any biller, with any payment method, on any device, providing payments in the millions from paying users to tens of thousands of billers across the country. Doxo users can now upgrade to doxoPLUS and receive five key bill payment protections that directly address the hidden costs of bill payment: Private Pay ™ Protection, Identity Theft Protection, Overdraft Protection, Punch Protection Credit and Late Charge Protection. Collectively, these protections reduce the hassle and anxiety of paying bills and improve the financial health of households.
doxoINSIGHTS leverages doxo’s unique, aggregated and anonymized bill payment data, including actual bill payment activity to established household service providers across the country. Doxo Bill Payment Statistics brings together the largest set of data available to analyze actual household payment activity, from more than 6 million paying consumers in more than 30,000 US postal codes. Doxo’s payment network covers more than 100,000 billers in 45 different service categories and enables payments using bank accounts, credit cards or debit cards. This one-of-a-kind statistical database powers doxoINSIGHTS reports – revealing key trends in household financial and bill payment behavior.
doxo provides simple and secure all-in-one bill payment to any biller, with any payment method, on any device. For consumers paying through a linked bank account on doxo, bank payments made on doxo are free. A doxoPLUS subscription adds five essential financial protections that improve the financial health of households. Through these services, doxo currently serves more than six million paying users who can make payments to more than 100,000 local and national businesses, making doxo the largest bill paying directory in the country. Network billers get paid directly, quickly and free of charge, and consumers are completely independent as to when and how they pay their bills. doxo has grown its user base by over 70% over the past year and is expanding its team to further accelerate growth and change the bill payment landscape to focus on the customer. Doxo investors include MDV, Sigma Partners and Bezos Expeditions. doxo is based in Seattle, WA.
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