Money Facts Archive Get the real facts that will shape your future by having them delivered to your Inbox!

Generally speaking, when a cost or expense is not anticipated and there is no disclosure in advance regarding the likelihood of incurring the cost; it may be considered to be hidden or undisclosed.

An example of this would be a consumer agreeing to pay a higher interest rate for a mortgage not realizing that the higher rate has nothing to do with the borrower's qualifications - but everything to do with building extra costs into deal to pay undisclosed fees or extra profits. For example, borrowing $200,000 over 30 years at a fixed rate of 6.65% instead of 6.20% generates an extra "hidden" cost of almost $60 per month or more than $20,000 over the life of the loan.

It is also important to realize that hidden costs are often the result of very complex and complicated schemes of deception that are often not detected until it's way too late.

Such is the case with the current U.S. housing and mortgage crisis which has plagued thousands of homeowners and investors. As you might have guessed, this scandal has all the right ingredients: political influence, greed, deception, non-disclosure, excessive fees and profits, and unsuspecting consumers.

Tragically, it doesn't appear that the U.S. Congress is above the use of such tactics. For example, in a few days the House will vote on the so-called "American Clean Energy and Security Act of 2009"; heralded as progressive legislation to preserve and regulate the efficient and controlled production and use of energy when, in reality (as reported by Citizens Against Government Waste), "this cap-and-trade plan is nothing more than a hidden tax that The Heritage Foundation has estimated could increase the average American family's energy bill by $1,500 annually!"

Just another small "hidden cost."

- Ed Smith, Publisher
The EHS Letter Manual