Americans Are At a Loss Tracking Their Financial Fees

Over half of Americans with investment accounts (53%) don’t know how to locate fees on their account, according to a NerdWallet survey. And 19% of Americans with workplace retirement accounts think they’re paying for types of fees that don’t actually exist.

These could be costly mistakes, considering a recent NerdWallet analysis shows that the total cost of these fees could be more than $1 million over a lifetime.

The NerdWallet survey was conducted online by The Harris Poll in June 2018 of more than 2,000 U.S. adults, including over 1,000 who have a bank and/or investment account or multiple accounts. The survey asked Americans whether they know how to locate their financial fees and which fees they think they’ve paid on their bank and investment accounts.

Key findings

• • Americans don’t know how to find their financial fees: More than half of respondents who have investment accounts (53%) and around a third with bank accounts (34%) don’t know how to locate the fees on their accounts.

  • Not all are realistic about the fees they pay: Almost 2 in 5 Americans with workplace retirement accounts (37%) and just over 3 in 10 with an IRA or brokerage account (31%) think they’ve never paid any fees on their accounts.

  • Some report paying nonexistent fees: More than 1 in 7 people with a bank account (15%) and an IRA/brokerage account (15%) report paying fees on their accounts that don’t exist. Almost 1 in 5 with workplace retirement accounts (19%) report paying fees that don’t exist on those accounts. Millennials (ages 22-37) are more likely than some older generations to say they’ve paid investment account fees that aren’t real (42% versus 12% of Gen Xers — ages 38-53 — and 7% of baby boomers — ages 54-72).

People have a hard time finding fees on their accounts

It’s virtually impossible to avoid every fee when investing money. But with 53% of Americans who have investment accounts not knowing how to locate fees on their accounts, the bigger problem is that most might not even know how much fees are costing them.

A larger proportion of millennials with investment accounts know how to locate fees on those accounts compared to older generations — 53% of millennials, compared to 47% of Gen Xers and 46% of baby boomers. Additionally, a smaller proportion of women know how to locate investment account fees compared to men (44% versus 49%).

What’s especially unfortunate about the 34% of people with bank accounts who aren’t sure how to locate fees on their accounts is that bank account fees are generally easy to avoid. But if account holders aren’t sure how to find them, they may be paying fees they’re unaware of.

Some think they’re dodging unavoidable costs

When it comes to fees on bank and investment accounts, some are avoidable and others less so. Bank fees are more likely to be avoidable if you prevent things like overdrawing your account, while there are certain inherent costs that come with investing.

Most report paying bank account fees

Almost three-quarters of Americans with bank accounts (72%) report paying real fees on their accounts (15% report paying fees that don’t exist, but more on that later). The payments include monthly and one-time fees.

Millennials are more likely than older generations to report paying real fees on their bank accounts (83%, compared to 72% of Gen Xers, 66% of baby boomers and 58% of the silent generation — ages 73-90). They’re also more likely to report paying overdraft fees on their bank accounts — nearly half (49%) say they’ve done so, compared to less than one-third of baby boomers (31%) and less than 1 in 5 of the silent generation (19%).

While lower-income households are more likely to incur overdraft fees than those with higher incomes — 47% of those with an annual household income of less than $50,000 compared to 29% of people with an annual household income of $100,000 or more — high-income households are just as likely as low-income households to incur low-balance fees (13% and 14%, respectively).

Many report avoiding unavoidable investment fees

More than one-third of Americans with a workplace retirement account (37%) say they have never paid any fees on these accounts. In reality, people who invest in the stock market can expect to pay expense ratio fees at the very least, and workplace retirement accounts often also come with unavoidable administrative and advisory fees.

Similarly, 31% of those with an IRA or brokerage account report having never paid any fees on their accounts — including commissions, mutual fund expense ratios and account fees — though it's highly unlikely most investors would be able to avoid all of these.

The finding that many people with financial accounts seem to think they’re dodging fees that are largely unavoidable is troubling. It’s important to know what fees are being charged and how much they cost, because they add up quickly. Consumers can check out NerdWallet’s cost of 401(k) fees calculator and cost of higher expense ratios calculator to learn more about how much they’re paying and how big a difference a single fee can make over time.

Some report paying fees that aren’t real

When we asked about the fees people have paid on their bank and investment accounts, we included a few fees that financial institutions don’t actually charge. Quite a few of those surveyed said they’ve paid these fees, again indicating they don’t necessarily understand which fees they’re incurring on their accounts.

Over 1 in 7 Americans with bank accounts (15%) report paying fees that don’t exist, like customer service fees (11%), joint account fees (4%) and high balance fees (3%). Men are more likely to report paying these fees than women, at 18% versus 12%.

Almost one-fifth of Americans with workplace retirement accounts (19%) think they’re paying fees that don’t exist — retirement savings fees, deposit fees and employer match fees — while 15% of IRA or brokerage account holders report paying these same nonexistent fees on their accounts. Millennials are the biggest offenders here — 39% with workplace retirement accounts report paying fees that aren’t real on their account (compared with 14% of Gen Xers and 8% of baby boomers), and 42% with IRA or brokerage accounts report this (compared with 12% of Gen Xers and 7% of baby boomers).

“It’s pretty clear many Americans don’t have a good handle on what fees they’re paying and why,” says Arielle O’Shea, NerdWallet’s investing and retirement specialist. “It’s crucial to understand these costs, as they can have a big impact on your retirement nest egg. The good news is that many can and should be reduced. If you’re not sure what you’re paying, contact your retirement plan administrator or your HR department. IRA investors can request information from their brokerage.”

Consumer takeaways

Know how to find the fees you’re paying on your account statements. It’s possible that you’re paying fees you don’t know about or you think you’re paying fees you aren’t, just because you aren’t sure where to look.

“Investment fees come in several forms, but the most common for retirement savers are mutual fund expense ratios. Look for these fees on the first or second page of the fund prospectus, which you can download from your broker or retirement account provider’s website,” says O’Shea.

Kimberly Palmer, NerdWallet’s banking expert, weighs in on how to identify fees your bank is charging you. “Bank account fees are typically listed on your monthly statement, whether you check it online or receive a copy in the mail. Any monthly fee will be listed and subtracted from your balance,” says Palmer.

Understand the types of fees you may be charged, and those you definitely won’t. You’ll find potential fees aplenty on financial accounts, but you can generally assume you won’t be charged for having a high balance or depositing your cash. Use our tips above to locate the fees on your accounts so you know what you are and aren’t paying.

Learn which financial account fees can be avoided and which are inevitable. Just because your bank or broker charges you a fee doesn’t mean that it’s a requirement. By opting for investments without sales loads or trade commissions, and choosing a bank without checking and savings account fees, you may significantly cut down on the costs of housing your money. Check out these primers on what types of fees you may find on your investment accounts and bank accounts, and learn how to avoid them.

Survey methodology