Nobody Likes Banking Fees — but 1 in 6 Won’t Try to Avoid Them

Erin El Issa
By Erin El Issa 
Edited by Robert Beaupre

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

MORE LIKE THISFinancial Planning

A NerdWallet survey finds that around 1 in 6 Americans (16%) wouldn’t do anything to avoid money management fees — despite the fact that many fee-dodging methods require only minutes and can yield significant long-term savings.

This finding follows a recent NerdWallet analysis that found that an ordinary consumer may be losing upward of $1 million to avoidable or reducible fees over a lifetime.

The NerdWallet survey, conducted online by The Harris Poll in June 2018 of more than 2,000 U.S. adults, asked Americans about the annoyance they feel when paying bank and investment account fees and what they would do to avoid these money management fees.

Key findings

  • Americans may find bank fees more annoying than investment fees: How annoying? Almost 2 in 5 Americans (38%) would find it more annoying to pay a $20 fee on a bank account than waiting in line at the DMV, compared to less than a third of Americans (32%) finding a $20 investment account fee more annoying than waiting in line at the DMV. Similarly, when asked about the annoyance of fees versus getting caught in the rain without an umbrella, 36% found paying a $20 bank fee more annoying, while only 31% found paying a $20 investment fee more annoying. This is unfortunate considering the previous NerdWallet analysis found that the cost of investing fees often greatly outweighs the cost of banking fees.

  • Less-affluent Americans are less likely to act against financial fees: Lower-income Americans — those with an annual household income of less than $50,000 — are about twice as likely to not do anything to avoid money management fees than Americans making an annual household income of $75,000-plus (21% versus 12%).

  • Younger Americans are more likely to take action to avoid money management fees than older Americans: Nine in 10 post-millennials (ages 18-21) would do something to avoid fees, compared to 79% of the silent generation (ages 73-90).

Americans find fees less annoying than many of life’s irritations

We asked Americans whether they would find it more annoying to pay a $20 bank or investing fee or encounter eight aggravating activities. Despite the outsized cost that potentially comes with financial fees over time, many Americans found each of the eight annoying situations more irritating than the $20 financial fees:

Almost 2 in 5 Americans find paying a $20 bank account fee to be more annoying than waiting in line at the DMV (38%) or sitting in traffic for an hour (37%), while closer to a third of Americans feel this way about a $20 investment account fee (32% find it more annoying than waiting in line at the DMV and 34% find it more annoying than sitting in traffic).

Overall, a slightly higher proportion of Americans think that a $20 banking fee is more annoying than a $20 investment fee, when compared to these other annoying events — 24% say none of the eight events were more annoying than the bank account fee, and 28% said the same for the investment account fee. Banking fees are easier to avoid than investment account fees, and the amounts people keep in bank accounts tend to be lower than those in investment accounts, so a $20 investing fee may be less noticeable due to the higher balances. Bank fees also can take away immediate spending power, while investing fees generally impact account holders over the longer term.

“It takes less time and effort than most people think to avoid or reduce financial fees, and the payoff is worth it,” says Arielle O’Shea, NerdWallet’s investing and retirement specialist. “Next time you’re stuck in traffic for an hour, use the time to call your bank and ask which of your account fees can be eliminated.”

Most will act to avoid financial fees, but they could do more

More than 4 in 5 Americans (84%) would do something to avoid money management fees. Still, when it comes to individual fees, many Americans wouldn’t take some relatively simple actions to avoid them.

The two most popular actions to avoid fees are setting up direct deposit and signing up for paperless statements, but not all Americans would do these things despite their ease. Just over half of Americans (51%) would set up direct deposit to their checking account, and less than half (45%) would sign up for paperless statements, both of which may only take minutes.

Less than 3 in 10 Americans (29%) would walk an extra three blocks to use an ATM within their bank network, and just over one-third of Americans (36%) would drive an extra mile to use an ATM within their network.

A relatively unpopular fee-dodging method is spending time researching more about investing and how to analyze fees, with less than 1 in 5 Americans (19%) willing to do this to avoid fees. (There are ways to do this without dedicating too much time or energy to it, and we detail some of these tactics below.)

A particularly concerning statistic to come out of our survey is that Americans with an annual household income of less than $50,000 are nearly twice as likely to do nothing to avoid money management fees than Americans with an annual income of $75,000 and up (21% versus 12%). Especially when it comes to investing fees, it’s likely that higher-income individuals will incur larger fees than those with low income due to having higher account balances. However, these fees may have a bigger impact on the finances of someone with a lower income.

The generations differ when it comes to fee avoidance

Not every generation feels the same way about fees or responds similarly. There are varying opinions across generations about the annoyance of financial fees versus other annoying activities.

Younger adults appear to be more willing than older adults to do something to avoid financial fees. Nine in 10 post-millennials (90%) would do something to avoid money management fees, compared to 79% of the silent generation (ages 73-90).

“All generations should be focused on these fees. But it’s promising to see that younger Americans are taking steps to avoid them, as fees — especially investing fees — can compound over time, making them most damaging over a long time horizon,” says O’Shea.

How to start saving on money management fees today

Avoiding or reducing your money management fees doesn’t have to be a daunting or time-intensive process. Here are a few relatively simple ways to avoid financial account fees:

Avoiding bank account fees

Open accounts at an online bank with no fees. Switching your checking and savings account to a new bank can be a hassle, but if you do it once, it can save you money every month. Online banks tend to have more options to avoid things like monthly maintenance fees, which a brick-and-mortar bank might charge you every month if you don’t follow its guidelines. As extra incentive, many online banks have higher interest rates on their savings accounts than the bigger brick-and-mortars.

Bonus: Opt out of overdraft protection. Federal law dictates that overdraft protection is optional, and offered on an opt-in basis. If you’ve accidentally opted in to coverage, or you didn’t understand the alternative, it’s a good idea to opt back out to save potentially major cash in fees. If you do this and you try to make a purchase that you don’t have the funds to cover, the transaction will be declined, instead of going through and prompting a fee in the process.

Not sure it’s worth it to take these bank account fee-dodging steps? Check out NerdWallet’s cost of bank fees calculator to get a reality check on what these seemingly small fees can cost you over a lifetime.

Reducing 401(k) account fees

Look at expense ratios when choosing your 401(k) investments. A mutual fund expense ratio is a percentage of your investment charged as an annual fee. When reviewing your 401(k) investment options, consider not just your investing goals, but also each fund’s expense ratio. Even a seemingly minor expense ratio like 1% can add up to thousands per year as your balance grows.

Find out how much 401(k) account fees will cost you over your lifetime with NerdWallet’s cost of 401(k) fees calculator.

Bonus: Consider whether your 401(k) is the best place to house the bulk of your retirement funds. “If your 401(k) offers matching dollars on your contributions, you don’t want to pass those up. But if the investments are pricey or the plan has high fees, consider contributing to an IRA once you’ve captured that full 401(k) match,” says O’Shea. “Any balance in a high-fee 401(k) should also be rolled into an IRA if you leave your job.”

Reducing IRA or brokerage account fees

Choose no-transaction-fee and no-load mutual funds. You may pay various fees or commissions when you buy or sell mutual funds, like mutual fund transaction fees and sales loads. However, there are plenty of funds you can choose that don’t have these fees, and you should absolutely opt for them if you’re trying to reduce your investment costs.

Bonus: Choose low-expense-ratio mutual funds for your IRA and brokerage accounts, just like you do for your 401(k). Like your 401(k), mutual funds in your IRA and brokerage accounts have expense ratios. Unlike your 401(k), you’ll likely have numerous fund options — and therefore, potentially more affordable fund options — in an IRA or brokerage account. And don’t worry, a low expense ratio doesn’t mean a low-quality fund.

Check out NerdWallet’s cost of higher expense ratios calculator to see how much you could save by opting for a more affordable mutual fund.


This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from June 6-8, 2018, among 2,036 U.S. adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Megan Katz, [email protected].

Get more smart money moves – straight to your inbox
Sign up and we’ll send you Nerdy articles about the money topics that matter most to you along with other ways to help you get more from your money.