Consumers pay more when prices are separated into multiple fees, according to research released by the Consumer Financial Protection Bureau.

The CFPB data is based on experiments with multiple rounds of buyers and sellers interacting in simple markets. It found that participants tended to pay more when prices were broken into sub-parts and were harder to understand. The research has implications for understanding how junk fees impede fair and competitive pricing. Specifically, this applies to bank products such as auto loans and mortgages. For example, consumers may have to evaluate extended warranties, add-ons, closing costs, and other fees instead of an all-inclusive price.

The CFPB says its research shows junk fees increase overall prices beyond what a fair and competitive market would allow.

Credit card pricing

Credit card products often include a mix of interest rates, late fees, balance transfer fees, annual fees, cash advance fees, and foreign transaction fees. Many credit cards offer introductory 0% APR periods on purchases or balance transfers. But these promotional rates are often followed by much higher standard APRs that can vary based on the cardholder’s credit score. Market data suggest that many consumers are selecting credit cards based on rewards. This can similarly be quite complicated, with varying earning and redemption rules.

Checking and savings accounts

Current account pricing can include a variety of fees. These include monthly maintenance fees, minimum balance fees, overdraft fees, and wire transfer fees. Some banks also offer complex tiered interest rates based on account balances. This makes it difficult for consumers to compare yields across different institutions. Some checking accounts advertised as “free” may in fact require minimum balances, recurring direct deposits, or other qualifications. These may obscure the true cost of the account.


Mortgage pricing can be extremely complex. There may include a wide range of interest rates, fees, and terms that vary. These will be based on factors such as loan type, credit score, or down payment. For example, adjustable-rate mortgages (ARMs) can have pricing structures that include initial fixed-rate periods, adjustment intervals, caps on interest rate changes, and margin rates. And consumers often pay a large number of separate closing costs to obtain a mortgage.

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Auto loans

Auto loan pricing can be complex. Interest rates that vary are based on factors such as credit score, loan term, down payment, and vehicle type. Some lenders also offer promotional rates or cash-back incentives. These can make it difficult for consumers to compare the true cost of financing across different offers. Add-on products, such as extended warranties, gap insurance, and credit life insurance, can significantly increase the overall cost of the loan.

The CFPB report, Price Complexity in Laboratory Markets, is available via this link