Financial Fees Could Cost Americans $1.1 Million Over Their Lifetime
By Erin El Issa
Most Americans use bank and investment accounts, but they wildly underestimate the cost of doing so — by perhaps more than $1 million over the course of their lives, according to a new NerdWallet analysis.
Companies have been known to waive the occasional fee for loyal customers, and it’s always possible a charge was applied to your account by mistake.
Even if a fee doesn’t blow your budget, over time even a series of small fees can add up and start to erode your wealth.
Once you identify a fee — especially one you weren’t expecting — don’t be afraid to ask why it was applied to your account and whether it can be refunded.
As stated above, the fees included in our lifetime total aren’t exhaustive. Here are some other fees you may be charged for your banking and investment accounts, which may be avoidable with a little know-how.
Inactivity fee: A checking account inactivity fee, which some banks charge if you don’t make deposits to or withdrawals from your account for a certain amount of time, can be avoided by using your account regularly and closing old accounts you no longer use.
Excess activity fee: Your savings account may charge a fee that’s quite the opposite of an inactivity fee — an excess activity fee. You may be charged if you make more than six transfers or withdrawals from your savings account in any given month. Unfortunately, you can’t get around this by choosing a different bank account, as these limits are set at a federal level. However, you can control how often you transfer cash, so be sure to limit it to six times or fewer each month.
Account closing or transfer fees: If you decide to move your investments to a new broker, you’ll probably have to pay account closing or transfer fees. These fees can be minimized by keeping account transfers to a minimum. Unless transferring will save you money on fees long-term, it’s probably a good idea to keep your funds where they are.
Instant transfer fees: Some person-to-person, or P2P, apps like Venmo and PayPal now have the option of instant transfer, meaning money can be transferred to your bank account in minutes instead of days. According to our survey, Americans used instant transfer 2.5 times, on average, in the past 12 months. The instant transfer fee can be avoided by waiting for the longer transfer, but it’s a low-cost fee, so it may be worth it to you to get your money faster.
Credit card processing fees: A P2P fee that you definitely shouldn’t incur is the credit card processing fee. Americans used a credit card to pay someone with a P2P account 1.6 times, on average, in the past 12 months. To avoid this fee, use your debit card or checking account when you pay someone with your P2P account.