MONEY Airlines

New ‘Basic’ Airline Ticket Is Worse Than Any Low-Fare Carrier Option

Economy class
Bart Sadowski—Getty Images

Delta recently introduced a new five-tier airfare scheme, including a revamped low-price "Basic Economy" ticket that's the riskiest, most restrictive, and least comfortable option in the sky.

Earlier this week, Delta announced that it is “redefining the products it offers customers to further distinguish the choices available to them,” with the 2015 rollout of a five different categories of service (and pricing) that passengers must choose from when buying flights.

Essentially, the more you pay, the better service and amenities you can expect. This is more or less the way things have always been with airline pricing. Yet the introduction of five flight categories—including “First Class” and an even higher class dubbed “Delta One,” as well as something called “Delta Comfort+” and “Main Cabin,” which used to be known as “Economy” or just coach—is unnecessarily confusing, and it certainly raises the bar in terms of instituting an onboard caste system. More importantly, Delta is flying into new territory at the low end of pricing, with the cheapest category providing the least flexible and least comfortable product of any American carrier.

“We’re providing Delta customers with a thoughtful, well-defined spectrum of options as they make decisions about travel,” Glen Hauenstein, the airline’s executive vice president and chief revenue officer, said in a press release. “Whether a customer prioritizes the perks of Delta One or the value of Basic Economy, every seat comes with impeccable service and unmatched reliability.”

Still, some travelers will be very surprised to find out what a Basic Economy seat comes without. Delta first began testing its low-price Basic Economy fare back in 2012 on a couple of flights. What stood out then about this low-fare option—and what remains unusual even in today’s profit-first, customers-last atmosphere—is how rigid and cruel it is. Neither advanced seat selection nor itinerary changes are allowed, not even for an extra fee. So this low-cost option is out of the question for couples or families who want to be assured they’ll sit together when flying. Also, because anyone not flying on a Basic Economy ticket has the right to arrange a seating assignment in advance, in all likelihood the passengers traveling on the cheapest tickets will be stuck in the worst seats on the plane. What’s more, because changes and cancellations are not possible under any circumstances, if an emergency arises and you must miss a scheduled flight, you’ll eat the entire cost of the ticket.

Today, Delta’s Basic Economy category is available from four Delta hubs (Atlanta, Detroit, Minneapolis, Salt Lake City) and 33 gateways, and it’s about to get more restrictive. Delta explained that as of February 1, several services that are currently available to Basic Economy ticketholders will be eliminated. These services include complimentary or paid upgrades, same-day standby, and priority boarding for a purchase.

It’s well understood that Delta introduced and expanded its Basic Economy category as a way to compete with Spirit Airlines, the much-maligned carrier that’s known for low fares followed by high fees for anything above the cost of a seat. Yet even the cheapest seats sold by Spirit Airlines, as well as low-fare, high-fee imitators such as Frontier Airlines, allow customers to pay extra for seating assignments and the right to change flight dates and itineraries. Frontier and Spirit also offer passengers the option of paying extra for upgrades, in the form of seats that may be larger or just come with more legroom.

The fare structures of Delta, Spirit, and all other airlines are meant to simultaneously attract customers and boost revenues. It’s just that some airlines go about seeking these goals in different ways. Spirit and Frontier are working the a la carte model, in which customers are wooed with a low upfront price, and then hopefully they’re upsold on a bunch of services later in the game. Delta’s new five-tiered model instead wants to get most of the upselling accomplished during the ticket purchase phase. The hope is that customers are so scared off by the absence of getting an advance seat, upgrade, or the option to change a flight that they’ll readily pay more upfront.

One way or another, there’s some upselling going on, and it’ll be difficult, uncomfortable, and often just plain impossible for travelers to actually complete a flight without paying above the base fare. A Delta spokesperson told Businessweek that the Basic Economy category could expand to more cities next year. And judging by the way that Spirit Airlines and its fee-crazed equivalent in Europe, Ryanair, have proven to be not only highly profitable operations but also industry trendsetters, more and more airlines are likely to follow in its a la carte, fees-for-everything footsteps. So, one way or another, when buying a ticket, when checking in, or during the flight itself, travelers should expect to pay more.

MONEY Airlines

A New Era Has Begun for JetBlue, and Travelers Will Hate It

Customers check in at JetBlue's counter at John F. Kennedy Airport in the Queens borough of New York City.
Andrew Burton—Getty Images

At JetBlue, legroom is disappearing and checked baggage will soon cost extra. In other words, the airline you fell in love with is following the playbook of airlines that everyone hates.

When word spread back in September that JetBlue CEO Dave Barger was stepping down from his post in early 2015, two interesting things happened: 1) The company stock soared, rising 5% immediately after the news; and 2) travelers who loved JetBlue for its customers-first policies began to panic.

As Fortune put it, equity analysts tended to view Barger “as being ‘overly concerned’ with passengers and their comfort, which they feel, has come at the expense of shareholders.” With Barger and his pesky, stubbornly customer-friendly policies out of the way, JetBlue—under the leadership of new CEO, former British Airways executive Robin Hayes—could hop on the pathway to higher and higher profits by implementing more fees and cost-cutting measures on par with other airlines.

Consequently, the change at the top was welcomed by investors and dreaded by flyers and travel advocates who loved JetBlue specifically because it didn’t engage in the very nickel-and-diming policies analysts were pushing for. Even before it was announced that Barger was out, Marketwatch foresaw the likelihood that JetBlue would soon begin “putting customers second,” while first and foremost pleasing investors by jacking up fees and cutting back on amenities. Frequent flyer expert Tim Winship described Barger’s departure as “the beginning of the end for JetBlue as we know it,” while noting the risks inherent in the airline’s likely policy shift:

Such changes would be wrenching for JetBlue loyalists, for whom the roomier seating and relative absence of nuisance fees have been key reasons to book JetBlue over the competition. Even the number-crunchers acknowledge that a remodeled JetBlue would jeopardize the considerable brand equity the airline has built up over the years.

Nonetheless, this week JetBlue announced that it is reducing average legroom and introducing a new fare structure that means passengers buying the lowest-price tickets will have to pay extra if they want to check luggage. The changes, which will be instituted starting in 2015, will leave Southwest Airlines as the only domestic carrier to grant free checked bags (two of them, in fact) for all passengers.

Shrinking legroom will come as a result of 15 more seats being added to JetBlue’s Airbus A320 planes. Even after squeezing in the new rows of seats, JetBlue’s average legroom will be 33.1 inches, which is still slightly more than what the typical passenger on Southwest or Virgin America can expect. The real heartbreaker to travelers is likely to be the new “Fare Families” structure, which consists of three bundled options that travelers must choose from when booking a flight. At the low end of the pricing spectrum, tickets do not include a checked bag. Passengers who pay higher fares are entitled to checked bags (one at the middle level, two at the high end), and also get bonus loyalty points.

Exact details on pricing and what specific amenities are and aren’t included in the various fares haven’t been released yet. JetBlue became immensely popular among travelers for perks including free snacks and free entertainment on seatback screens. Presumably, even at the low end JetBlue passengers will get more than the “Bare Fares” of Spirit Airlines, which include with almost nothing other than basic transportation—even water and seat reservations cost extra. But JetBlue’s moves certainly seem inspired by the example set by Spirit, which is widely known as one of the simultaneously most hated and most profitable airlines.

JetBlue’s changes are clearly aimed at pleasing investors—shares of the company stock jumped more than 4% on Wednesday, nearing a seven-year high—but Hayes, currently the airline’s president, still claimed that the company was focused on delivering “the best travel experience for our customers.” In a statement accompanying JetBlue’s press release, Hayes is also quoted saying that JetBlue remains different from the pack. “As we focus on executing this plan,” Hayes said, “JetBlue’s core mission to Inspire Humanity and its differentiated model of serving underserved customers remain unchanged.”

Travelers seem to feel quite differently about the matter. The very active traveler community at the Flyertalk forum has been bashing the changes because they remove what made JetBlue special and worth seeking out, and turn the carrier into just another (hated, annoying, nickel-and-diming) carrier. “Lovely. The ‘We’ll attract more customers by being exactly like every other airline’ move,” commented one Flyertalk member. “Charging for bags and a crappy FF [frequent flier] program? What a combo!” commented another. “Seriously though, they’ve completely lost their appeal.”

Another highlighted how Southwest will soon be the only major domestic carrier including free checked bags with flights: “Now, especially if I have a bag, Southwest will be the way to go…and I hate Southwest.”

MONEY credit cards

This Is Why Prepaid Cards Are Still Risky

swiping card
Erik Isakson—Getty Images

You might not be able to recover your money if your card is lost or stolen. The Consumer Financial Protection Bureau wants to change that.

Over the past five years, prepaid cards have become an increasingly popular alternative to debit and credit cards. Last year, 12% of households used the cards, which can be loaded with cash and used like debit cards.

They’re especially popular among millennials, whom surveys have found to be credit card averse and distrustful of financial institutions. More than 25% of people aged 25 to 34 years old used prepaid cards last year, according to a survey from the Federal Deposit Insurance Corporation. And among people without bank accounts—who are typically lower income—27% used them, up from 12% in 2009.

People without bank accounts are also more likely to rely on the cards for critical financial transactions. Almost 80% of unbanked households with prepaid cards used them to make everyday purchases, pay bills, or receive payments. Some even say the main reason they use prepaid cards is to “put money in a safe place” or “save money for the future.”

What these people might not know is they’re taking a risk, since prepaid cards don’t have the same legal protections as other kinds of plastic. Right now, if you lose your prepaid card, or if someone steals your card and uses it, you might not be able to recover all of your money, depending on the terms of your contract.

The Consumer Financial Protection Bureau wants to change that. On Thursday, the agency proposed new rules that would require prepaid cards to offer the same kind of fraud and lost-card protections that credit cards have, along with other kinds of protections.

“Consumers are increasingly relying on prepaid products to make purchases and access funds, but they are not guaranteed the same protections or disclosures as traditional bank accounts,” CFPB Director Richard Cordray said in a statement. “Our proposal would close the loopholes in this market and ensure prepaid consumers are protected whether they are swiping a card, scanning their smartphone, or sending a payment.”

The biggest deal of the new proposal is that it would limit your liability for fraudulent charges. Under the new rule, if your prepaid card were lost or stolen, the most you would pay for unauthorized charges would be $50, as is the case with credit cards.

The new rules would also require that financial institutions send you statements about your balance, offer you opportunities to resolve errors like double charges, and disclose more information about fees, on a form that looks like this. That’s important because prepaid cards sometimes charge high fees for activation, balance inquiries, and inactivity.

The proposal would also add protections to prepaid cards that allow users to overdraw into a negative balance, such as imposing limits on late fees.

The CFPB hasn’t implemented the changes yet. The proposed rule will be open for public comment for 90 days before the CFPB decides whether to issue a final rule.

Related

MONEY Odd Spending

A Brief History of ‘Pay What You Want’ Businesses

hand holding up quarter
ballyscanlon—Getty Images

A pay-what-you-want investing service? Yes, it's here—and it's hardly the only business bold (crazy?) enough to allow customers to pay whatever they feel is appropriate, even $0.

On November 11, a new investment company called Aspiration launches with the goals of “democratizing the financial services industry,” “making elite investments available to everyday investors,” and “building a movement around the idea that you can make money and make a difference at the same time.” The minimum investment is only $500, and the pitch is that at long last, middle-class investors will get access to the kinds of investment products that traditionally have been available only to the rich. The concept is noble enough, and the focus on regular folks is certainly refreshing, yet Aspiration is hardly the only service out there aiming to woo less affluent investors.

No, what makes Aspiration truly unique—unheard of, in fact—is its fee structure. Or rather, the absence of a fee structure. Instead of charging a fee, Aspiration “allows its customers to decide how much to pay the company – even if that number is zero,” the launch announcement explains. “Aspiration calls this approach ‘Pay What Is Fair’ and while it has been tried before in one-off fashion, this is the first time it has been brought to the investment world and the first time a company has built its business model on this approach.”

Whether such a revolutionary business model can work for investing or is little more than a gimmick is impossible to tell right now. For obvious reasons, “pay what you want” is a curiosity that’s intriguing to consumers and grabs plenty of headlines, but thus far other PWYW experiments have yielded results that are decidely mixed. For example:

Restaurants: Bubby’s, an all-American restaurant with two locations in Manhattan, is running a “Pay Whatever You Like” buffet Thanksgiving dinner with some of the proceeds going to charity, and it’s clear the owners expect customers to pay a pretty penny: There’s a “suggested donation” of $75 per person. Another restaurant, a diner in North Carolina called Just Cookin, recently removed prices from the menu, leaving the exact amount paid for food and service up to the customer and God.

In probably the most well-known PWYW restaurant trial, the fast-casual chain Panera Bread opened a nonprofit café five years ago, and the experiment was so successful that in early 2013 the concept was expanded to four dozen St. Louis locations, which offered turkey chili on a pay-what-you-want basis. Roughly half a year later, however, PWYW chili was removed from menus. Apparently Panera received tons of generous donations early on in the program, but interest (and money collected) faded as time passed. Even so, there are still five nonprofit Panera Cares locations in the U.S., where the menus have suggested donations but no set prices.

Payday App: The biggest problem with payday loans is that while the fees might seem small—say $15 per $100 borrowed—the terms represent the loanshark-like equivalent of an APR of 400%. Enter ActiveHours, a payday loan alternative that pays customers immediately for the hours they’ve already worked and, incredibly, has no mandatory fees.

“We don’t think people should be forced to pay for services they don’t love, so we ask you to pay what you think is fair based on your personal experience,” the ActiveHours site explains. Even so, consumer advocates warn that people who become dependent on such a service are more likely to wind up behind on their bills, and they also might wind up (voluntarily) paying tips to the service that are themselves the equivalent of a loanshark’s terms.

Taxis: In 2009, during perhaps the Great Recession’s darkest days, a former Wall Street banker named Eric Hagen introduced Recession Ride Taxi, a PWYW cab service in Burlington, Vt. Hagen offered rides only on nights and weekends as a way to help people out and perhaps make a few dollars. Even though Uber and other ride-share services would seem to be encroaching on Hagen’s idea, Recession Ride Taxi is still running—and still operating on a PWYW basis.

Book, Music, Comedy Downloads: Way back in 2000, Stephen King decided to skip over publishers and sell a serial novel called “The Plant” strictly in digital e-book format using an honor system. Readers were asked to pay $1 per installment, and King said he would keep writing if three-quarters of those who downloaded the book paid up. At one point, less than half of those downloading were actually paying for the book, and the author never completed it—though the author reportedly earned nearly $500 million in the venture. As things now stand, the six existing parts of “The Plant” are available for free download at King’s website.

In 2007, Radiohead began selling digital downloads of an album called “In Rainbows,” and when fans dropped it into the virtual checkout basket, the only price listed was “It’s Up to You.” Some rock-n-roll old-timers, including KISS’s Gene Simmons, were not impressed. “That’s not a business model that works,” Simmons said at the time. “I open a store and say, ‘Come on in and pay whatever you want.’ Are you on f***ing crack? Do you really believe that’s a business model that works?” Nonetheless, Radiohead’s move was probably ahead of its time considering that few artists make money selling their music nowadays anyway.

More recently, the work of Louis C.K., who over the years has been at the forefront of unorthodox direct-sales strategies including selling comedy special downloads for a flat $5 and comedy show tickets with no intermediaries or fees, was featured in a “Humble Bundle” of comedy albums offered on a pay-what-you-want basis. Humble Bundle is known for bundling together several video games and allowing customers to pay whatever they like for the package, with portions of the payment going to the developers, charity, and Humble Bundle.

MONEY Airlines

We’re Paying an Extra $5 Billion in Airline Fees This Year

Checked bags
Izabela Habur—Getty Images

A new study projects that travelers will pay $28.5 billion in a la carte airline fees globally this year, an increase of roughly $5 billion over 2013.

A new study from the airline consultancy firm IdeaWorksCompany projects that ancillary revenues—money generated for sales above and beyond the base price of flights—will hit $50 billion (OK, $49.9 billion) for carriers worldwide in 2014, up from an estimated $43 billion last year and $36 billion in 2012. For 2014, $21.4 billion of the total is expected to come from “frequent flier and commission-based” revenues, which include the sale of frequent flier miles and sales commissions from hotels, rental cars, and travel insurance booked through the airline.

The majority of the global ancillary revenue total, on the other hand, comes from a familiar and ever-expanding roster of fees confronting airline passengers, including charges for checked and carry-on baggage, seating assignments, and on-board services such as food, beverages, and wi-fi. Worldwide, the IdeaWorks study estimates, the total for such a la carte fees will be $28.5 billion for 2014, up from $23.7 billion a year ago. Baggage fees are expected to represent roughly 25% of all ancillary revenues generated by the typical U.S.-based airline this year, up from 20% in 2012.

To some extent, travelers have grown accustomed to being charged extra for checked baggage and other services that used to be included in the base cost of air travel. Yet IdeaWorks president Jay Sorensen warned that relentlessly adding on fees or jacking up the rates of existing fees can be risky for airlines. “Consumers are best served when choice is accompanied with better value,” Sorenson said in a statement accompanying the 2014 study. “Merely charging a fee for a service that was once free may quickly degrade the brand of a traditional airline and alienate their core consumer base.”

What’s particularly galling to travelers is that fees have been added or hiked skyward at a time when airfares are also getting more expensive. The average domestic round trip in the U.S. now runs $500, more or less, and prices have risen nearly 11% over the past five years, after adjusting for inflation. Airfare has gone up at the same time that fees have gone up as well, so it’s unsurprising that airlines have recorded record-high profits of late.

What might seem more surprising—not to mention pretty darn unfair—is that airfares and fees are rising even as fuel costs decline substantially. As consumer advocate Christopher Elliott pointed out recently, airlines originally blamed higher fuel costs as the reason they were forced to add fees for checked baggage in the first place. But now that the cost of fuel is retreating, airlines aren’t dropping fees or flight prices. In fact, just the opposite is happening.

MONEY Ask the Expert

How To Find Out What You’re Paying For Your Retirement Account

140605_AskExpert_illo
Robert A. Di Ieso, Jr.

Q: How can I find out how much I am paying in fees in my 401(k) retirement plan?

A: It’s an important question to ask, and finding an answer should be a lot easier than it is right now. Studies show that high costs lead to worse performance for investors. So minimizing your expenses is one of the best ways to improve returns and reach your retirement goals.

Yet most people don’t pay attention to fees in their retirement plans—in fact, many don’t even realize they’re paying them. Nearly half of full-time employed Baby Boomers believe they pay zero investment costs in their retirement accounts, while 19% think their fees are less than 0.5%, according to a new survey by investment firm Rebalance IRA.

Truth is, everyone who has a 401(k), or an IRA, pays fees. The average 401(k) investor has 1.5% each year deducted from his or her account for various fees. But those expenses vary widely. If you work for a large company, which can spread costs over thousands of employees, you’ll likely pay just 1% or less. Smaller 401(k) plans, those with only a few hundred employees, tend to cost more—2.5% on average and as much as 3.86%.

A percentage point or two in fees may appear trivial, but the impact is huge. “Over time, these seemingly small fees will compound and can easily consume one-third of investment returns,” says Mitch Tuchman, managing director of Rebalance IRA.

Translated into dollars, the numbers can be eye-opening. Consider this analysis by the Center for American Progress: a 401(k) investor earning a median $30,000 income, and who paid fund fees of just 0.25%, would accumulate $476,745 over a 40-year career. (That’s assuming a 10% savings rate and 6.8% average annual return.) But if that worker who paid 1.3% in fees, the nest egg would grow to only $380,649. To reach the same $476,745 nest egg, that worker would have to stay on the job four more years.

To help investors understand 401(k) costs, a U.S. Labor Department ruling in 2012 required 401(k) plan providers to disclose fees annually to participants—you should see that information in your statements. Still, even with these new rules, understanding the different categories of expenses can be difficult. You will typically be charged for fund management, record-keeping, as well as administrative and brokerage services. You can find more information on 401(k) fees here and here.

By contrast, if you’ve got an IRA invested directly with a no-load fund company, deciphering fees is fairly straightforward—you will pay a management expense and possibly an administrative charge. But if your IRA is invested with a broker or financial planner, you may be paying additional layers of costs for their services. “The disclosures can be made in fine print,” says Tuchman. “It’s not like you get an email clearly spelling it all out.”

To find out exactly what you’re paying, your first step is to check your fund or 401(k) plan’s website—the best-run companies will post clear fee information. But if you can’t find those disclosures, or if they don’t tell you what you want to know, you’ll have to ask. Those investing in a 401(k) can check with the human resources department. If you have an IRA, call the fund company or talk to your advisor. At Rebalance IRA, you can download templates that cover the specific questions to ask about your retirement account costs.

If your 401(k) charges more than you would like, you can minimize fees by opting for the lowest-cost funds available—typically index funds, which tend to be less expensive than actively managed funds. And if your IRA is too pricey, move it elsewhere. “You may not be able to control the markets but you do have some control over what you pay to invest,” says Tuchman. “That can make a big difference over time.”

Do you have a personal finance question for our experts? Write toAskTheExpert@moneymail.com.

More from Money’s Ultimate Retirement Guide:

How should I invest my 401(k)?

Are my IRA contributions tax-deductible?

Why is rolling over my 401(k) to an IRA such a big deal?

MONEY College

This “Smart” Way to Pay for College Could End Up Costing You an Extra 3%

A senior at Western Kentucky University walks past flowering cherry trees on WKU's campus on his way home from class.
Western Kentucky University has one of the highest credit card surcharges. Alex Slitz—AP

A new study from CreditCards.com finds that colleges are increasingly adding surcharges for charging tuition. And these fees typically exceed any potential miles or cash back earned from your card.

It’s getting harder to turn junior’s college tuition bills into free vacations for Mom and Dad.

Wealthy parents have long tried to lessen the pain of paying their kids’ tuition bills by charging the costs to a credit card that pays rewards, with the hope of getting a bit of cash back or a roundtrip flight to Rome out of the deal.

But colleges are now making this strategy less profitable by adding fees for charging tuition, according to a study released Tuesday by Creditcards.com.

The survey of the largest public, private, and community colleges found that 90% of the 100 biggest public universities that accept credit cards charge convenience fees, and almost 70% of the 100 biggest private colleges. (Only 12% of the largest community colleges add credit card surcharges, but community colleges tuition tends to be quite low.)

In most cases, the fees now exceed the value of frequent flier miles or cash back that the parents can earn on a rewards card.

The average reward mile or point is worth less than 2¢, says Matt Schulz, senior industry analyst for CreditCards.com. Meanwhile, the average big college now charges 2.62% for processing tuition through a credit card, according to the survey.

And some schools charge much more. According to the CreditCards.com survey, the big colleges charging the highest fees are:

School State Type Convenience fee rate
Western Kentucky University KY Public 2.99%
Saint Joseph’s University PA Private 2.99%
Roger Williams University RI Private 2.99%
Kansas State University KS Public 2.90%
Ohio University-Main Campus OH Public 2.90%
Kent State University at Kent OH Public 2.90%
University of Akron Main Campus OH Public 2.90%
Bowling Green State University-Main Campus OH Public 2.90%

The Impetus for the Fees

Such fees have become increasingly common in the last decade. A separate survey last year by the National Association of College and University Business Officers had found that 44% of colleges charged a fee for using a credit card, up from 14% in 2003.

Colleges have been adding surcharges in part because they have come under pressure to pare expenses. And credit card companies charge all vendors—including colleges—for processing payments. In 2013, for example, MasterCard’s fees ran from 1.05% to 3.16%.

In addition, schools that do charge fees appear to be encouraging their competitors to follow suit.

“I get a lot of complaints from other schools” that charge fees, says Michael Reynolds, executive director of student financial services at Auburn University, which doesn’t add a surcharge. Reynolds says Auburn absorbs the surcharge—which he estimates at between 1% and 2% of the amount charged—as a cost of doing business.

He estimates that about half Auburn’s tuition bills are put on credit cards. In most cases, he says, it’s just a matter of convenience for the parent or student. But he added that some families do seem to be trying to build up rewards.

The Better Alternative for Most

The fees are just one of many reasons financial experts warn parents away from charging tuition.

Credit card interest rates are usually so high that parents who don’t have enough ready cash to pay off the bill immediately could end up paying thousands of dollars in extra interest, says Kevin Yuann, director of credit cards for NerdWallet.

Anyone who can’t pay cash up front for tuition would really be better off with federal student or parent loans.

Compared to the 15.66% average annual percentage rate on credit cards, federal student loans charge just 4.9% this year, after fees are added in. Parent PLUS loans have a total APR, including fees, of 8.1%.

The federal loans also have much more flexible repayment options, allowing borrowers to stretch out payments for up to 25 years or adjust the payments downwards if their incomes fall. Students working in public service jobs can also get some of their federal loans forgiven.

The Best Reward for the Rest

Absolutely sure you can pay off the big credit card balance quickly? Contact your school to find out whether there’s a fee for swiping.

While the majority have one, there are still several schools that do not charge students or parents extra. For example:

School State Type
Auburn University AL Public
DePaul University IL Private
St John’s University-New York NY Private
The University of Alabama AL Public
University of Nevada-Las Vegas NV Public

And then, assuming there is no charge, make sure you’re getting the most back you can.

Nick Ewen, a frequent business traveler who writes often on rewards at ThePointsGuy.com, says parents with lots of ready cash can turn tuition into valuable goodies.

One British Airways card, for example, offers a free companion ticket to those who spend at least $30,000 a year. And Southwest Airlines offers a year’s worth of free companion tickets to those who earn at least 110,000 points each calendar year.

Or, consider the winners of MONEY’s Best Credit Cards of 2014. The Barclaycard Arrival Plus World Elite offers two points per $1 spent and miles can be applied to your credit card bill to offset the costs of any kind of travel. Or if you prefer cash back, Citi Double Cash and Fidelity Investment Rewards American Express each give you 2% on every purchase.

With the latter, you can direct your earnings to a 529 college savings account—thereby reducing the amount you have to charge next semester.

MONEY Food & Drink

Free Guac! The Spirit Airlines of Burritos Stops Nickel and Diming Customers

chip and guacamole
Christian Draghici—Alamy

Chipotle rival Qdoba has started offering guacamole, vegetables, and other extras free of charge with entrees.

It must be difficult to compete with Chipotle. The Mexican restaurant chain is widely credited as the godfather of the ultra-hot fast-casual restaurant, the only category flourishing in recent years, and the model blamed for stealing business away from casual-dining and fast food chains alike. The Chipotle concept—customizable orders, high-quality ingredients, literal and figurative transparency about what goes on in the kitchen—has been applied to pizza, “better” burgers, and even grilled cheese, and there’s no sign of the business slowing down. Even after instituting a price hike earlier this year, Chipotle was able to post a 12% increase in store traffic and a 17% rise in same-store sales during the second quarter of 2014.

Among the many Chipotle copycats is one that chose the unfortunate tactic of competing directly with it in terms of style of cuisine. Qdoba Mexican Grill was founded two years after Chipotle, in the same city where Chipotle was born (Denver). Both being “Mexican Grills,” their menus are similar. But Chipotle holds a sizeable lead in terms of number of locations, by a count of roughly 1,600 to 600, and most importantly, Chipotle has the consensus edge in terms of quality and value. In fact, a compelling argument can be made that Chipotle makes America’s best burrito bar none.

Another thing keeping Qdoba’s reputation as that of little more than a Chipotle knockoff was the way it nickel-and-dimed customers, a la Spirit Airlines, if they wanted to personalize orders. Like Chipotle, Qdoba charged extra for guacamole. But it also made fajita veggies and queso an add-on—which struck many customers as, well, pretty cheesy. But all of that changed as of Friday, when Qdoba announced a simplified pricing structure in which guac, queso, fajita vegetables, chile BBQ sauce, and other extras could be added at no extra charge.

“We heard complaints from guests and from team members,” Tim Casey, brand president of Qdoba, told USA Today. “They view (the extra charges) as nickel-and-diming them.”

Yes, customers are funny that way: When they’re getting nickel-and-dimed with upsells, they view it like they’re being nickel-and-dimed with upsells. Earlier this year, the executives in charge of pricing at sister ice cream chains Maggie Moo’s and Marble Slab likewise instituted a flat pricing structure with unlimited “mix-ins” after “discovering” that customers hated getting charged extra for every little extra ingredient.

What makes Qdoba’s move especially interesting is that free extras—guacamole especially—represent a point of separation and perhaps superior value when compared with top dog Chipotle. In recent months, a strange “I Know That Guacamole Is Extra” meme made the rounds, referring to Chipotle’s relentless reminding of customers that, well, guacamole costs extra. Around $2 extra, in fact. At Qdoba now, however, guacamole is free, and Qdoba surely hopes that some other meme takes root and spreads the word.

MONEY Customer Service

3 Industries That Desperately Need Customer Service Makeovers

Chimpanzee on a telephone
Brad Wilson—Getty Images

Comcast is hardly the only company that should be doing some soul searching and commit—not only with words but actions—to making customer service genuinely better.

Because the state of customer service has been bad for so long, and because we’ve heard many times over that some or another big initiative would improve customer service dramatically only to have little or no impact, we’re skeptical about the effectiveness of any broad campaign supposedly crafted to address age-old customer grievances. Nonetheless, it was good to see Comcast’s recent announcement that a long-serving executive named Charlie Herrin had been named as the company’s new senior vice president of customer experience. “Charlie will listen to feedback from customers as well as our employees to make sure we are putting our customers at the center of every decision we make,” a message from Comcast president and CEO Neil Smit explained on Friday.

Read between the lines and it sure looks like Comcast is acknowledging that in the past, customers haven’t exactly been top of mind when it comes to company decisions. That’s no revelation to consumers, of course, who have routinely dinged Comcast for terrible customer service. In 2014, Comcast “won” the annual Worst Company in America competition as voted by Consumerist readers, the second time in recent years it has nabbed that dubious honor.

While it’s unclear what Herrin and Comcast will do to improve customer service, the first step in solving a problem is acknowledging that you have one, which Smit did more squarely when he said, “It may take a few years before we can honestly say that a great customer experience is something we’re known for. But that is our goal and our number one priority … and that’s what we are going to do.” To which the consensus reaction among consumers is … it’s about damn time. Followed by, we’ll believe it when we actually see real,meaningful change.

To be fair, it’s not just Comcast that’s sorely in need of a customer service makeover. Here are three entire business categories that are regularly bashed for not putting customers’ needs first on the agenda.

Pay TV & Internet Providers
Current Comcast competitor and likely merger partner Time Warner Cable is also a regular contender for the worst service title, as are other pay TV-Internet providers including DirecTV and Verizon.

Among the complaints are that there is a lack of true competition in the category, because roughly three-quarters of Americans have exactly one local choice for a high-speed Internet provider. A survey published this summer indicated that more than half of Americans would leave their cable company if they could, and nearly three-quarters said that pay TV providers are predatory and take advantage of the lack of competition. Among the most hated pay TV practices that consumers would love to see changed are promotional rates that are replaced by skyrocketing monthly charges, frustrating and time-consuming run-ins with customer service reps, and bundled packages overloaded with channels and options the customer doesn’t want (let’s add smaller packages and a la carte channel selection, please).

Wireless Providers
The good news for cell phone users is that customer satisfaction is on the rise, increasing 2.6% according to the 2014 American Customer Satisfaction Index (ACSI). The bad news, however, is that while we’re happier with the actual gadgets (from Samsung in particular), satisfaction with the companies providing our cell phone service—including AT&T, Verizon, T-Mobile, and Sprint—remains stagnant and below average.

Plenty of other studies also show just how frustrated and dissatisfied consumers are with wireless providers nowadays. A vote-off at Ranker.com, for example, placed AT&T at the top of the list of “Companies with the Worst Customer Service.” Among the many problems consumers have with wireless providers is that choosing a handset and data-minutes-texting package is absurdly complicated, with countless permutations, obfuscations, and mysterious add-on charges. This past weekend, a New York Times columnist presented a painstaking step-by-step analysis of why the $199 price advertised for the new iPhone 6 is a joke—because by the time fees and monthly upcharges are tacked on, upgrading to the new phone will easily run more than $600.

“Wireless service has always been one of the most complex purchases a human can possibly make,” Eddie Hold, a wireless industry analyst with market research firm NPD Group, summed up in a Consumer Reports story last year. “It’s always been horrific.”

Banks
Number 3 on the Ranker list of companies with the worst customer service, just below AT&T and Time Warner Cable, is Bank of America. Another study, from 24/7 Wall Street, used customer service surveys to put Bank of America in the #1 spot for its Customer Service Hall of Shame, and two other banking institutions, Citigroup and Wells Fargo, are in the top (bottom?) 10. (The study factored in ratings for these institutions’ banking and credit card services.)

What may come as a surprise—a sad and ironic one, at that—is that customer satisfaction with banks is apparently at a record high. The 2014 J.D. Power study on U.S. Retail Banking Satisfaction indicates that big banks and regional banks have made some strides in terms of making customers happier (or less disgusted) with their service, and that overall bank scores are higher than they’ve ever been since the study has been conducted. Yet the J.D. Power study shows there’s a long way to go: The most common reason given for switching banks is poor customer service, and millennials, minorities, and affluent consumers stand out as being particularly dissatisfied with today’s banks.

“Even with record high satisfaction, there are some banks that fall far short in meeting customer needs,” J.D. Power’s Jim Miller said via statement. “It is easy for banks to become complacent. To stay at the top of their game, banks should focus on those customers who are not satisfied. And consumers should keep in mind they have the opportunity to shop banks to find the right combination of services, products and fees to meet their needs.”

What’s your pick for the company with the worst customer service? Tweet us at @MONEY with the hashtag #unhappycustomer. Here’s what readers have already said. Add your nomination, and we may publish your feedback in a future post.

Related:
5 Packages That Could Replace Pay TV As We Know It
How to Pick a Bank

MONEY

3 Stupidly Simple Ways to Make Sure You Never Ever Pay ATM Fees

Bankrate ATM fees
Image Source—Getty Images

A new Bankrate report shows that the cost of using an out-of-network ATM is growing. Here's how to avoid those charges completely.

Using an ATM that’s not run by your bank will now cost you about as much as a latte at Starbucks.

Consumers now fork over, on average, $4.35 per transaction on out-of-network ATMs, according to Bankrate.com’s just-released 17th annual checking survey. That’s a 5% jump over last year and a 23% increase over the past five years.

“ATM fees have been going up for a long time,” says Bankrate’s chief financial analyst Greg McBride. “It’s low hanging fruit for the banks.”

The fee you pay for these types of transactions comes from two sources: The ATM owner charges you a surcharge for using the machine, and your bank charges you for going out of network. The former fee advanced 7% to $2.77, while the latter climbed 3% to $1.58.

Together these costs add up to a decent chunk of change: One trip to a non-sanctioned ATM a month costs more than $50 a year.

For consumers, this is a completely unnecessary outlay, however.

“There are steps people can take to avoid ATM fees, regardless of how long they keep rising,” says McBride. “Plenty of people out there not paying fees at all.”

1. Have a Treasure Map in Hand

Download your bank’s mobile app, if you haven’t already. Chances are it contains a feature that lets you see nearby branch or ATMs that won’t charge a fee.

Make a habit of checking before you stick your card into somebody else’s ATM—there may be a cheaper option closer than you think.

2. Get Cash Where You Buy Your Groceries

Many stores—including pharmacies and supermarkets—allow you get cash back at the point of sale. If you’re getting something, why not also make a habit of getting cash on these trips, since this basically functions as a free ATM withdrawal.

3. Go with a Bank that Won’t Punish You

Not the type to remember to use your bank’s ATM? You might want to trade in your brick-and-mortar bank for an online one. Ally and Schwab do not charge you to use another bank’s ATM (since these institutions don’t have their own) and they will reimburse you for any ATM fees.

And since digital financial institutions don’t service branches, fees tend to be lower and you can even receive interest on your checking account. Ally currently offers 0.10% on balances under $15,000. In a way, you could say they’re paying you to use another bank’s ATM.

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