Financial traps - it seems that no one is immune! From hidden fees to sneaky loopholes, they catch even the savviest of consumers.

The best way to avoid these financial traps and protect ourselves from dubious claims and predatory service providers is to arm ourselves with the information we need to spot them coming a mile away, and dodge those bullets!

The Truth About Hidden Fees

Did you know that a study from 2006 found that the average American adult pays $942 each year in hidden fees and surcharges?

Wondering where that money went? You’re not alone.

While it is true that we need to be accountable for our actions as consumers (which means always reading the fine print!), some of the dubious fees that predatory service providers have been sneaking onto our bills and bank statements as of late can stump even the sharpest consumer.

Although the onus used to be on the service provider to educate the customer and offer excellent service, these days the burden has been placed on the consumer to be informed and aware. From banking to cell phone bills, now more than ever it is essential to read your contracts, ask for a breakdown of fees and monitor your bills for any and all services that you use.

Here are three industries whose hidden fees are ravaging America’s wallets:

1. Gym Memberships

Any long-term membership should be weighed carefully, as it can have a lasting impact on your finances, but gym memberships in particular are notorious for being riddled with hidden fees and traps.

According to the Better Business Bureau, there were 7787 complaints filed by gym and health club members in 2009 - landing them in the top 20 most complained about industries. According to the Better Business Bureau of New York, most of the complaints revolved around contracts and billing. “Consumers turned to BBB claiming that gym salespeople made big promises that never materialized”, they explain. “According to these consumers, they would later find out that those promises were not included in the written contract, and the fitness center refused to honor verbal agreements.”

So, how do you protect yourself? The first solution is to read any and all contracts in their entirety before signing. Be sure to have a clear understanding of the price that you will be paying throughout the length of your contract and the services that you will be receiving in return. Be on the lookout for monthly fees or ‘account maintenance fees’, and as the BBB point out - make sure that any promises made by the salesperson are included in black and white on your contract.

Finally, be sure to understand your legal rights before signing your contract. For example, states such as New York require health clubs to be ‘bonded’, which protects members in the event of unexpected club closure. Some states also have legislation around contract cancellation, so be sure to familiarize yourself with the regulations for your region.

2. Cell Phone Providers

Mobile providers have become synonymous with hidden fees and money traps. If you ask enough of your friends and colleagues, you are sure to hear some horror stories about massive bills and binding contracts.

The best way to protect yourself from cell phone bill nightmares is to read your contract carefully, and ask questions if there are any items that you are unsure about. Here are five things that you should be on the lookout for before you sign on the dotted line:

1. Activation Fees

Many cell phone providers will charge you a fee when you sign up, as well as a fee when you change or upgrade plans.

2. Usage Limits

Be sure to understand any limits on your texting, data, and minutes. Even services that appear to be ‘unlimited’ in the glossy brochure outlining the plan can have hidden ‘overage’ fees that can put a major dent in your bill!

3. Long-Distance and Roaming Charges

Before you set foot in a new city, you need to have a firm understanding of what it will cost you to use your phone. Some carriers set your phone to roam automatically in a new region, so be sure to familiarize yourself with your phone’s settings. And don’t forget - even if you have a plan with unlimited nationwide calling, you still may be charged for long-distance calls if you use your phone in another city.

4. Downloading Charges

Before you download that new ringtone or update an app, make sure that you understand any premium fees associated with the download. And beware - even if the download fails, you may still see the charge appear on your bill!

5. Cancellation Fees

Before you sign any contract, you must ensure that you have a full and complete understanding of the cancellation fees involved. Some providers force you to pay for the remaining value of the contract, while others will require you to pay a monthly fee - either way, you need to understand the consequences of ending your contract.

3. Travel Providers

A vacation in the sun can quickly go from a paradise holiday to a financial nightmare if you aren’t in the know about the small fees that will sneak their way onto your bill.

According to the FTC, hotel bills often end up being far more than travellers bargain for. Melissa Hebert, a Consumer Education Specialist, announced in late 2012 that the FTC was sending warning letters “to 22 online hotel reservation sites that may be violating the law by not including mandatory fees, which can add as much as $30 a night to your stay, in some of the prices they quote online.”

Hebert explains that these hidden fees are often labelled ‘resort costs’, and are used to cover the costs of internet, newspapers, or fitness facilities - whether you use them or not! Travel Weekly also reported in 2012 that hotels are enjoying great returns from these fees, at your expense. “Surcharges, which also include cancellation fees, early departure charges and room-service delivery fees” they explain, “are profit centers because their margins are in the 80% to 90% range”.

While the sheer number of sneaky practices and hidden fees that we face every day can feel overwhelming as consumers, the good news is that personal protection is in our reach.

By taking the time to carefully read the fine print and asking around to your trusted friends and colleagues before making a major purchase or commitment, you’ll not only save your wallet - but your sanity, as well!

Have you ever been fooled by hidden fees? Share your story in the comments below.