A new report released today by doxo found that hidden costs associated with paying bills amount to $196 billion annually, averaging $1,495 per household. Each year U.S. households spend over $4.46 trillion on household bills ($3.35 trillion on the 10 most commonly recurring bills). Staying on top of these bills is the single biggest factor affecting consumer financial health, and the unnecessary complexity in managing them results in billions of dollars in avoidable consumer expenses each year, along with significant customer support costs. doxo’s 2024 Hidden Costs of Bill Pay Report not only highlights the concerns American consumers have about issues like identity fraud, late fees, overdraft charges, and negative credit impacts, but also quantifies the expense each of these causes for the average U.S. household.
Today’s bill-pay market is designed primarily around the needs of billers rather than those of the consumers. Instead of offering a simple, all-in-one experience that empowers the consumer, the traditional bill pay experience requires consumers to understand and navigate each biller’s individual policies and penalties, manage multiple logins, share payment account information across different platforms, and keep track of individual due dates. doxo was founded to solve this problem by putting the consumer in the driver’s seat, empowering them to take control of their household finances and eliminating the hidden costs associated with paying bills.
The figures in this year’s Hidden Costs of Bill Pay Report are 18% higher compared to last year’s report, which showed that the hidden costs of bill pay had an overall market impact of $167 billion, and an average annual cost per household of $1,268. Mostly moderate increases contributed to this spike, with credit impacts seeing the biggest increase, which is not surprising given high rates across the board. Last year credit fees cost consumers an average of $945, as compared to $1,186 in this year’s report.
Breaking Down the $1,495 Consumers Pay in Hidden Costs Associated with Paying Household Bills:
Analysis of consumer survey and statistical data shows the average U.S. household incurs $1,495 per year in additional hidden costs associated with bill payment, comprised of:
- $76 in Identity Fraud Costs: The average household out of pocket costs for identity fraud amounts to $10 billion, or $76 per household a year, as compared to a total of $9 billion, or $67 dollars per household, last year. These are just the direct costs, not including the time and expense consumers spend to restore and repair their identity records once compromised.
- $60 in Overdraft Fees: Banks charged consumers over $8 billion in overdraft fees this year, or about $60 per household. This is compared to a total of $10 billion, with an average of $75 per household, last year. According to a number of reports, in general, overdraft fees are dwindling.
- $173 in Late Fees: Missing or paying a bill late often incurs late fees, and 32% of households reported incurring one or more late fees. This totaled $23 billion in household expenses, or $173 per household, as compared to a total of $24 billion, or $181 per household last year.
- $1,186 in Added Costs of Credit: Staying current on bills and debt payments is a primary factor for strengthening credit. doxo’s analysis shows that staying ahead on payments and improving a credit score by 35 points can save the average household $1,186 per year in interest expense. The average U.S. household carries over $100,000 in revolving debt – between mortgages, auto loans, and credit cards, primarily – so boosting credit and qualifying for lower interest rates significantly reduces expenses.
“In today’s economic climate, it’s never been more critical for American consumers to be aware of the hidden fees associated with their household bills. This includes costs like identity fraud, late fees, overdraft fees and detrimental credit impacts,” said Liz Powell, Senior Director of INSIGHTS at doxo. “The reality is that while many Americans are paying the price, these hidden costs are easily avoidable expenses. Using a service like doxo can help people avoid incurring a per-household cost of $1,495 a year on average, empowering consumers to achieve their financial goals while spending less time and effort managing their bills.”
High Consumer Concern about Stolen Payment Information and Credit Impacts
Consumers are increasingly concerned about the variety of ways they get stuck with expenses when managing and paying their bills. doxo’s survey of active household bill payers shows:
- 86% worry about having payment account information stolen
- 86% worry about identity fraud when managing online accounts
- 85% worry about bill pay impacts on their credit score
- 70% worry about incurring late fees and penalties
- 59% worry about overdrafts to their bank account when paying bills
Read the full Hidden Costs of Bill Pay Report 2024 here.
About doxoINSIGHTS
doxoINSIGHTS provides direct insight into The Bill Pay Economy™ by leveraging consumer surveys and doxo’s unique aggregate bill pay data set, comprising actual bill payment activity to confirmed household service providers across the country. doxo data brings together the broadest available data set for analyzing actual household bill payment activity, pulling from over 10 million paying consumers across over 97% of U.S. zip codes. doxo’s payment network covers over 120,000 billers in 45 different service categories and enables payments using bank accounts, credit cards or debit cards. This uniquely broad statistical foundation powers doxoINSIGHTS reports – uncovering key trends for household financial health and bill payment behavior. Uncovering an even deeper level of insight into Americans’ cost of living, doxo’s proprietary Cost of Bills Index™ (COBI), a new feature of doxoINSIGHTS, provides a consistent basis of comparison at the state, county and city level.
About doxo
doxo delivers innovation that transforms the Bill Pay Economy™ for consumers, billers and financial technology providers. For over 10M consumers, doxo’s all-in-one bill pay makes it simple to organize all bills, track all due dates, and pay any bill on any device through a secure checkout. doxo empowers consumers to avoid or eliminate hidden bill pay costs that average more than $1400 per household each year. For billers, doxo’s network-driven platform enables online and mobile payments with a ridiculously simple integration, radically lower costs, and game-changing features that are unavailable with legacy bill pay vendors. For fintech partners, doxo delivers financial innovations to consumers across 97% of US Zip Codes, paying from more than 5,000 financial institutions to over 120,000 billers in 45+ service categories. For employees, doxo is a creative, ever-learning team that is passionate about building fintech tools that dramatically improve the bill pay experience. For investors, doxo provides an extraordinary opportunity to invest alongside Jackson Square Ventures, MDV, and Bezos Expeditions to disrupt a market that accounts for over $4T of US Household spend. To learn more about America’s leading bill pay network, visit doxo.com.
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