What Is a Service Fee?
A service fee is a monetary charge added to a customer’s bill or account for a service that has been provided by a business. There are numerous types of service fees that vary by industry. The most common fees for consumers include bank service fees, credit card service fees, and service fees from other utility providers.
Banks may charge a service fee for services provided, for account maintenance, or as a penalty; these fees typically vary by bank and account. Some accounts assess a monthly account fee for maintaining an account. In other instances, a minimum daily account balance is required. When the account balance falls below the minimum requirement, a minimum balance fee may be assessed. Banks also may charge wire transfer fees for electronically transferring money from one account to another. Penalty service fees might be charged for over-drafting an account, which is often referred to as a non-sufficient funds (NSF) fee.
Credit card companies may charge a service fee for finance charges, annual memberships, cash advance service, balance transfer, or as penalty; these fees also vary by company and account. Finance charges can be assessed for each transaction charged to an account, while annual membership fees typically are charged each year that a line of credit is extended to a consumer. Cash advance fees apply when cash loans are given from the line of credit — the fee usually is a percentage of the amount of money advanced. Balance transfer fees are charged when one credit card is used to pay off the balance of another credit card. Penalty fees can result from late payments and spending over the limit of the credit card, as well.
Another common type of service fee comes from various utility providers. They may charge service fees for either processing payments or as a penalty. Cellular phone companies, cable or satellite television companies, and Internet provider companies oftentimes charge an early termination service fee when a consumer fails to maintain the service for the duration of the contract. Late payment fees are also common among utility providers.
Examples of other miscellaneous service fees could include a delivery service fee when ordering food, an application fee when applying for an apartment, or a tax fee from a mortgage company. A tax service fee is charged when property taxes are collected monthly with a mortgage payment. The mortgage company uses a tax service agency to manage the property taxes and passes the cost on to the consumer, even though it is often a required service.
Written by Stephanie M. Lucas
