NerdWallet Study: Americans Could Lose More Than $1.1 Million in Banking and Investment Fees Over Their Lifetime
A big part of financial health is making sure you save and invest at least 10% to 15% of your income each pay day. Although you might be doing everything right when it comes to preserving and growing your cash, there’s something you might not be aware of that could be chipping away at your nest egg. That something is fees.
According to a recent NerdWallet study, consumers are losing more than $1.1 million in banking and investment fees over their lifetime. “Consumers are losing a great deal of money to financial fees, but most disturbing is that they don’t know it. The difference between what the average consumer thinks they’ll spend on fees in their lifetime and what we’ve projected they’ll actually spend is striking. Fees can quickly erode wealth, and unfortunately the onus is on the consumer to hunt these fees down, and reduce and avoid them where ever possible,” said Arielle O’Shea, NerdWallet’s investing and retirement specialist.
Those pesky fees are more than an annoyance—they’re draining your wealth. Here are some of the survey findings.
Consumers aren’t aware of how much they’re paying
Most consumers aren’t even aware of how much they’re shelling out in financial fees. When NerdWallet asked survey respondents to estimate the amount of money being spent, the answers weren’t even close to being correct. On average, Americans think they’ll only pay a little more than $2,000 in lifetime fees.
NerdWallet discovered Americans could pay more than $369,000 in lifetime fees for their workplace retirement, IRA, checking, and savings accounts. If you decided to invest these fees, the total value would be $1.1 million, assuming a 6% return on investment. That equals three times the cost of the fees themselves.
Roughly 48% of Americans have been hit with an unexpected investment or bank account fee
If you’ve been hit with an unexpected investment or bank account fee, you’re not alone. No matter how careful you are, you’re bound to be charged a fee you weren’t prepared for. The study found roughly 48% of Americans have been charged an unexpected fee on an investment or bank account. Overall, approximately 7 in 10 American adults (68%) have been charged a fee on an investment or bank account.
Younger people are more likely to face avoidable fees than older consumers
There’s bad news for young bank customers. According to the study, when it comes to finances youth isn’t always on your side. NerdWallet found millennials are less likely than baby boomers to have money in a bank account (80% versus 95%) or investment account (47% versus 67%) but more likely to be charged a fee (73% compared to 64% of baby boomers).
The Good news: You can avoid some bank fees
Don’t let all the bad news get you down. Know that you don’t have to sit back and accept all the fees that come your way. There are some methods for avoiding excessive bank fees.
Ken Tumin, founder and editor of DepositAccounts.com, told The Cheat Sheet that choosing your bank carefully and preparing ahead of time can help you steer clear of some bank fees. “The best way to avoid a monthly checking fee is to avoid checking accounts that are not free checking accounts. Free checking accounts have no monthly fee regardless of balance or activity,” said Tumin. He also told us you can sometimes have a fee waived if it’s the first time you’ve been hit with a penalty. If you’re a repeat offender, however, you’re likely out of luck.
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