Surveys this year have consistently shown that “the cost of living” is a major pain point for consumers. A new report has highlighted the staggering hidden costs associated with bill payments that may be a major contributor to that pain.
According to the report from doxo, those hidden costs amount to $196 billion annually, or an average of $1,495 per household. This financial burden is a significant factor affecting consumer financial health, as U.S. households collectively spend over $4.46 trillion on household bills each year, with $3.35 trillion allocated to the ten most common recurring bills.
The complexity of managing these bills results in billions of dollars in avoidable expenses and substantial customer support costs. Doxo's 2024 Hidden Costs of Bill Pay Report highlights consumer concerns about identity fraud, late fees, overdraft charges, and negative credit impacts, quantifying the financial toll these issues take on the average U.S. household.
The report indicates that the current bill-pay market primarily caters to the needs of billers rather than consumers. Traditional bill payment processes require consumers to navigate each biller's policies, manage multiple logins, share payment information across platforms, and track individual due dates.
This year's report shows an 18% increase in hidden costs compared to the previous year, which reported a $167 billion market impact and an average household cost of $1,268. Credit impacts saw the most significant increase, with average credit fees rising from $945 last year to $1,186 this year.
Breakdown of hidden costs
Identity fraud costs: Households incur an average of $76 annually due to identity fraud, totaling $10 billion nationwide, up from $67 per household last year.
Overdraft Fees: Consumers paid over $8 billion in overdraft fees, averaging $60 per household, a decrease from $75 per household last year.
Late Fees: Late payments resulted in $23 billion in expenses, or $173 per household, slightly down from $181 per household last year.
Credit Costs: Households can save $1,186 annually by improving credit scores, as staying current on bills is crucial for financial health.
"In today’s economic climate, it’s critical for American consumers to be aware of the hidden fees associated with their household bills,” said Liz Powell, senior director of INSIGHTS at doxo.
The report also highlights consumer concerns, with 86% worried about stolen payment information and identity fraud, 85% about credit score impacts, 70% about late fees, and 59% about overdrafts.