User Fee

DEFINITION of 'User Fee'

A sum of money paid by the individual who chooses to access a service or facility. Examples of user fees include highway tolls, parking charges and national park entry fees. With user fees, the individual directly pays for something he wants and receives what he has paid for. In contrast, taxes must be paid by force and do not necessarily go toward a specific service or facility that an individual actually uses or benefits from.

BREAKING DOWN 'User Fee'

Because user fees are more palatable than taxes, politicians may sometimes try to disguise taxes as user fees. However, sometimes the line between user fees and taxes is blurred, as in the case of gasoline taxes being used to fund the Interstate Highway System. Government services and facilities that are supported by user fees instead of by taxes more closely resemble private businesses because it is apparent whether a true demand exists for those services and facilities.



RELATED TERMS
  1. Clearing Fee

    A fee charged by a clearing house for its services. A clearing ...
  2. Service Charge

    A type of fee charged to cover services related to the primary ...
  3. Congestion Pricing

    A method used to reduce traffic by charging a fee to road users ...
  4. Garbage Fees

    Unnecessary fees tacked onto mortgage closing costs by lenders ...
  5. Junk Fees

    Nebulous charges assessed at the closing of a mortgage that go ...
  6. Network Effect

    A phenomenon whereby a good or service becomes more valuable ...
Related Articles
  1. Retirement

    Are Fees Depleting Your Retirement Savings?  

    Each retirement account will have a fee associated with it. The key is to lower these fees as much as possible to maximize your return.
  2. ETFs & Mutual Funds

    A Guide To Investor Fees

    Fees are one of the most important determinants of investment performance and something that every investor should know.
  3. Financial Advisor

    How To Optimize Your Portfolio and Reduce Fees

    Investment fees aren't avoidable altogether, but there are strategies investors can employ to keep those fees at bay and reduce the impact on returns.
  4. Professionals

    Why Facebook Will Never Charge User Fees (FB)

    Understand why Facebook is unlikely to ever charge users; the site's business model of leveraging free users to charge advertisers is highly profitable.
  5. Investing

    How a 1% Annual Fee Can Ruin Your Nest Egg

    What kind of impact does an annual 1% fee have on your portfolio? The answer may surprise you.
  6. Financial Advisor

    How to Talk Fees with Clients

    Talking about fees with clients is not always a fun discussion. Here's the best way to go about it.
  7. ETFs & Mutual Funds

    3 Investment Fees That Are Negotiable

    Investment fees are a necessary evil but that doesn't mean they have to be overly costly. There are ways to negotiate some of the expenses down.
  8. Investing

    Cut Your Bank Fees

    Find out how to get the bank to pay you for using their services, not the other way around.
  9. Investing

    Facebook Users Might Earn Money Via "Tip Jar" (FB)

    Facebook is considering a plan to allow users to earn money from its platform by using tipping jars and making sponsored posts.
  10. Retirement

    Using ETFs To Replace Your Expensive Mutual Funds

    Fees associated with many mutual funds looks small. Some are barely over 1% or even lower. But over time those fees erode the overall value of your portfolio. And even in the near term, as in ...
RELATED FAQS
  1. What fees can I expect from a financial adviser?

  2. What kinds of fees are involved in futures trading?

    Learn what the various costs are that are charged by brokerage firms and trading exchanges to individual futures trading ... Read Answer >>
  3. Where do I look for fees that I am charged on investments? What are those fees called?

    The fees and expenses charged for investments vary. The fees usually depend on the type of investment and the investment ... Read Answer >>
  4. What countries represent the largest portion of the global Internet sector?

    Learn which countries are most likely to impact the growing Internet sector based on recent user growth and largest populations ... Read Answer >>
  5. What are typical trust fund management fees?

    Learn about trust fund management fees, such as the annual management fee, annual expense ratio, brokerage commissions and ... Read Answer >>
  6. How do mutual fund expense ratios affect returns?

    Learn what kinds of mutual fund fees there are, how to find out what fees your funds have and how they impact the future ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center