This ‘tiny’ fee will cost over $10,000 in your lifetime

With plenty of banks and different types of accounts on the market, it’s no wonder many Americans don’t know how to choose the best bank option for them.

GOBankingRates surveyed over 1,000 people to find out more about American banking habits and preferences and found that many people are wasting too much money on unnecessary banking fees. Instead, that money could be earning interest in a high-yield savings account — which means Americans might be missing out on major opportunities to grow their wealth.

Keep reading to find out how you can stop yourself from losing thousands of dollars over your lifetime. 

RELATED: Take a look at pieces of money advice you can't ignore: 

13 pieces of money advice you can't afford to ignore
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13 pieces of money advice you can't afford to ignore

1. Pay yourself first

"People still don't grasp the fact that they need to save a dime out of every dollar," author and self-made millionaire David Bach told Business Insider in a Facebook Live interview. He said the average American who's saving money is saving just 15 minutes a day of their income, when they should be saving an hour.

Bach noted troubling research from the Federal Reserve that revealed nearly half of Americans wouldn't have enough money on hand to cover a $400 emergency. Yet, he continued, millions of those people will buy a coffee at Starbucks today and expect to buy the new $800 iPhone next year. Americans have money, he says, but we aren't saving it.

So get on the "pay-yourself-first plan," as Bach calls it, and automatically save an hour a day of your income. "When that money is moved before you can touch it, that's how real wealth is built," he said.

2. Beware of lifestyle creep

There's a lot of pressure in your 20s and 30s to keep up with your friends. Maybe they're buying a nicer car or a house, but if you're not in the financial position to keep up, don't try.

"I always refer to it as 'lifestyle creep' because one of the big things that people can do — that's an advantage to them — is keep their fixed expenses somewhat stable and reasonable for what they make," Katie Brewer, a Dallas-based certified financial planner who founded Your Richest Life, told Business Insider.

Planning for your recurring costs — like mortgage, rent, a car payment, and insurance — ensures that expenses won't creep up on you and derail your financial future. Of course, Brewer said, if you're making good money you should have the freedom to spend it how you wish, as long as your lifestyle doesn't overtake your income.

In short: Live below your means.

3. Take advantage of an employer-sponsored 401(k)

Putting money into a retirement plan as early as you can, no matter the amount, is a smart and easy way to pay yourself first.

If your company offers a 401(k) plan, take advantage of it. In some cases, employers will offer a contribution match. "That means the company contributes a set amount — say, 50 cents for a dollar — for every dollar you contribute up to a specified percentage of your salary," Beth Kobliner writes in her book "Get a Financial Life: Personal Finance In Your Twenties and Thirties."

"That's free money, equivalent to a 50% or 100% return. There's nowhere you can beat this!" she writes.

Plus, 401(k)s allow you to contribute your pre-tax money, meaning the more you contribute now, the greater the growth (thanks, compound interest) and the more money you'll have down the road, though you will be taxed when you withdraw the money for retirement. For 2017, the maximum contribution to a 401(k) is $18,000.

4. Invest in the stock market, just don't try to time it

"No one can time the market, so know that if there is a decline, it's going to bounce back. Over time, being in the market pays off more so than staying out of it," Michael Solari, a certified financial planner with Solari Financial Planning, told Business Insider.

A smart play, according to Solari, is to put your money in a low-cost target date retirement fund.

Sometimes known as "set it and forget it" investments, these diversified funds automatically adjust their asset allocation and risk exposure based on your age and retirement horizon. Early on, when the need for that money is still a couple decades away, the fund will adopt a more growth-focused strategy. As you ripen toward retirement, it dials back the risk.

You may not get the average annual return of 11% in your target date fund — given you'll be invested in a blend of stocks, bonds, and alternative assets — but if you get even 6% per year, an original $10,000 investment will be worth more than $32,000 in 20 years without you having to do a single thing. Compare that with $12,200 in your high-yield savings account or $10,020.20 in your traditional savings account.

kid put coin to piggy bank on the vintage wood background, a saving money for future education concept and copy space for input text.

5. Build an emergency fund

Let's face it: It's really not a matter of if you'll need to fork over cash for a car or home repair, child expense, or medical emergency, but a matter of when.

"No matter how well you plan or how positively you think, there are always things out of your control that can go wrong," Bach writes in his bestseller "The Automatic Millionaire."

"People lose their jobs, their health, their spouses. The economy can go sour, the stock market can drop, businesses can go bankrupt. Circumstances change. If there's anything you can count on, it's that life is filled with unexpected changes," he wrote.

Most financial planners suggest stockpiling anywhere from three to nine months worth of expenses in an emergency fund that you can turn to when in need. If you don't have savings at the ready, you run the risk of having to rely on family or friends for help, or worse, falling into debt.

6. Pay off your credit card balance in full every month

Sometimes a credit card can feel like free money, until you're slapped with the bill. Even then, most credit cards only require you to pay 1% to 3% of your balance each month, which can be an alluring prospect if your budget is tight. But consistently paying the minimum could cost you a fortune in the long run, damage your credit score, and affect your ability to qualify for a mortgage.

Farnoosh Torabi, a financial expert, author, and host of the "So Money" podcast learned this lesson the hard way.

Not only did she swipe her credit card with no reservations and adopt the bad habit of paying just the minimum amount — Torabi said she once forgot to pay the bill all together.

She remembered incurring a late fee that showed up on her credit report and gave her a true "wake-up call." The incident happened before she "realized the power of automating" her bills, a practice that can save you money on late fees and relinquish you from remembering due dates and the embarrassment of missing a payment.

7. Don't sit on too much savings

Saving money is important — and could be easier than it sounds — but if you're saving too much, you may be keeping yourself from building wealth.

Though you're "never going to kill your financial future" by accumulating money, Brewer says, "you're losing out on opportunity costs by having money sitting around ... especially if it's sitting in an account making barely anything in interest."

If you're risk-averse, one way to manage savings overflow is to move your money into a high-yield savings account, where you could be earning 1% interest on your money, rather than the 0.01% earned in a traditional savings account. Or, as previously mentioned, stick it in a low-cost target date fund and see your returns balloon over time, with little to no work required.

8. Have more than one credit card

It may seem financially reckless to have a wallet full of credit cards, but it's actually smart. According to John Ulzheimer, credit expert at, having a single credit card can damage your credit score, thanks to something called your credit utilization ratio — that is, how much of your available credit you're actually using.

"That percentage is very, very influential in your credit score," explains Ulzheimer. "People say that you're in good shape if you keep your utilization within 50% of your available credit, or 30%, but really, it should be below 10%."

Available credit counts all the cards you have: If you have one card with an $8,000 limit and one with a $6,000 limit, your total available credit is $14,000, even if you only spend $1,000 a month. With a single card, you have no unused credit cushioning the impact of your spending. The closer you get to your limit, the harder the hit on your credit score.

9. Pay off high-interest debt first

Sallie Krawcheck, a former Wall Street executive and the founder and CEO of Ellevest, says paying down high-interest debt should always be prioritized, even above building an emergency fund.

She explained the math in an article on Ellevest:

"Say you have $5,000 of credit card debt at an 18% interest rate. Say you happen upon $5,000 of money. If you take some of the advice out there, and split the use of that $5,000 (half to establish an emergency fund, half to pay down credit card debt), you still have $2,500 of credit card debt and $2,500 of money sitting in cash.

"The $2,500 of credit card debt at an 18% interest rate costs you $450 a year. The emergency fund earns almost nothing in interest. So you're out $450."

Bottom line: You'll save more paying off the debt than you'd earn if you invested it, whether in a high-yield savings account or the stock market.

10. Always be insured

Every American citizen is required to have health insurance, or be fined hundreds of dollars by the IRS each year. Kobliner advises signing up for insurance should be "your No. 1 financial priority" because it'll protect you from unforeseen accidents or illness, and prevent yourself or your family from going bankrupt in the case of an emergency.

If your employer offers health insurance, take it, Kobliner says. It's almost always cheaper than buying a policy on your own (but keep in mind that you can be covered by your parent's insurance until age 26). Before signing up, though, make sure you understand the cost and extent of the plan, including your deductible, or how much you'll be paying out-of-pocket before insurance takes over.

If you do end up needing to purchase a policy on your own, head over to to compare plans and pricing.

11. Track your spending

Business Insider's Libby Kane has written, edited, and read hundreds, maybe thousands, of stories about money during her career, and says she's learned that "the best, most critical first step you can take to improve your finances is to track your spending."

Keeping tabs on where your money is going, whether fixed expenses like rent or mortgage payments and transportation costs or discretionary spending like dining out and travel, is a crucial part of mastering your money.

Setting up a spreadsheet or using a service like LearnVest or Mint can help you make cuts where necessary and even set you on a path to early retirement, if that's what you're after.

12. Pay your taxes — and be smart about it

"Whether you owe money to the tax man at the end of the year or not, it's always a smart move to file your taxes," Kobliner advises. 

And be aware that you can save money on taxes by taking advantage of deductions, or the specific expenses you're allowed to take out of your income before calculating your owed taxes. The standard deduction — $6,300 for singles and $12,600 for couples — is a good place to start, Kobliner says.

You can also itemize deductions to maximize your savings by listing specific deductions, including expenses for housing costs like mortgage interest or property taxes, and charitable donations, or making use of tax credits.

And if you don't file your taxes? You could pay a penalty fee of at least $135, plus interest on the money you owe, and lose ground on your credit report, among a host of other financial consequences.

13. Be patient

When bestselling author and motivational speaker Tony Robbins asked billionaire Warren Buffett a few years ago, "What made you the wealthiest man in the world?" Buffett replied, "Three things: Living in America for the great opportunities, having good genes so I lived a long time, and compound interest."

"The biggest thing about making money is time," the investor, who's now worth more than $76 billion, said in a recent HBO documentary about his life. "You don't have to be particularly smart, you just have to be patient."

In his latest letter to Berkshire Hathaway shareholders, Buffett announced that he was on his way to winning a $1 million bet he made in 2007 that his investment in an S&P 500 index fund would outperform five hedge funds over a decade.


Bank Fees Can Snowball Into Thousands in Lost Savings

Many banks charge different types of fees for things such as overdrafts and withdrawals from out-of-network ATMs. Depending on the bank account, you might even get slapped with monthly maintenance fees or monthly service fees. GOBankingRates’ survey found that the average American pays $7 in banking fees every month — and although that number seems small, it can really add up.

If you put that $7 each month into a savings account with an annual percentage yield of 0.09%, that would add up to an additional $91 in savings each year. Over a lifetime, that would amount to $5,274 if that money had been deposited into an average savings account — or a staggering $10,221 with a high-interest savings account, such as the one offered by Bank5 Connect, which has a 2.05% APY.

Americans Value Good Rates — but Most Aren’t Clear on What That Means

Americans were asked what features or perks would entice them to open a new bank account, and the top response was good rates, with 38% selecting this option. However, many Americans don’t actually know how to choose an account with high rates.

Survey Question: What type of bank account usually has the highest APY/savings rate? 


When asked which type of bank account has the highest savings rate — from a choice of CDs, checking accounts, high-yield savings accounts, jumbo CDs, money market accounts or regular savings accounts — a third of Americans said they didn’t know. The next most popular choice was checking accounts, with 27% choosing this answer. Although some checking accounts allow you to earn interest, checking accounts tend to have lower APYs compared to any of the other account options listed.

So which accounts typically offer the best savings rates? The correct answers were CD accounts (both regular and jumbo) and high-yield savings accounts. 

Additionally, many Americans don’t know the difference between annual percentage rate and annual percentage yield. Thirty-six percent of Americans surveyed said they would choose a bank account with a 1.25% APR, and only 24% said they would choose an account with a 1.25% APY, when given the choice between these accounts and ones with 0.10% APR, 0.10% APY, 1.00% APY, 1.01% APR or 1.01% APY.

APR is the total amount of interest that you’ll pay annually to secure the loan, including the interest rate plus other charges. APY is the total amount of interest that you’ll earn from a deposit account, including the interest rate and compounding interest, over the course of a calendar year. When choosing a checking, savings or CD account with the best rates, you should look for an account with the highest APY.

Read More: 62% of Americans Don’t Know Banking Basics — and It’s Costing Them

Women Lag Behind Men in Their Understanding of Savings Rates

Female respondents were more likely than male respondents to say they didn’t know what type of bank account usually has the highest savings rate, with 39% of females unable to identify the account with the highest rate versus 26% of men.

Male respondents also appear to have a better understanding of APR vs. APY, with 28% of men opting for an account with a 1.25% APY — the highest savings rate of the account options offered — and only 20% of women choosing the correct answer.

Younger Generations Are Savvier With Their Banking Habits

The GOBankingRates survey asked Americans to identify which of the following statements are true about online banks:

  • Online banks have more fees than brick-and-mortar banks
  • Online banks have higher savings rates than brick-and-mortar banks
  • Online banks are less safe than brick-and-mortar banks
  • Online banks aren’t FDIC insured
  • You can only access online banks during regular business hours
  • You can withdraw money from an online bank account
  • None of the above are true

Respondents were instructed to select all that apply. The correct answers were “online banks have higher savings rates than brick-and-mortar banks” and “you can withdraw money from an online bank account.”

There was an inverse relationship between age and percentage of Americans who answered this question correctly, with 86% of Gen Zers, 79% of millennials, 76% of younger Gen Xers, 68% of older Gen Xers, 66% of younger baby boomers and 63% of older baby boomers choosing the right options.

The survey also asked respondents what types of bank accounts they currently have open, from a choice of savings accounts, checking accounts, money market accounts, CDs, individual retirement accounts and other accounts. Most Americans across all ages have checking accounts, but younger generations are more likely to have a savings account. Over half of all respondents ages 18 to 44 have a savings account open, but that’s true for less than half of respondents ages 45 and older.

How To Achieve Your Savings Goals in 2019

By avoiding hefty bank fees and opting for high-yield savings accounts, Americans can put additional money toward reaching their savings goals.

Most people across age groups have the same savings goal for 2019 — except for Generation Z. Respondents ages 25 and older are mostly aiming to save more money for emergencies, whereas Gen Zers want to save more money in their regular savings accounts.

More female respondents than male respondents expressed a desire to save more money for emergencies in 2019, at 53% and 42%, respectively.

Avoid Bank Fees At All Costs — They Really Add Up

Whether your goal is to save more for emergencies or to cushion your regular savings account, avoiding bank fees should be part of your savings strategy. Some easy ways to avoid paying costly banking fees include opening a no-fee account, sticking to your bank or credit union’s ATMs for withdrawals, maintaining your minimum balance, signing up for e-statements to avoid a paper statement fee and setting up a direct deposit.

Step Out of Your Comfort Zone To Secure the Best Rates

Older generations tend to prefer banking in person at a physical branch or ATM — 78% of older baby boomers have a deposit account with a traditional brick-and-mortar bank. However, to secure the best rates, Americans of all ages might be better off putting their money in the best online savings accounts, which tend to offer customers higher interest rates thanks to lower overhead costs at online banks.

Despite their reticence to move to a fully online bank, older Gen Xers and older baby boomers have already embraced mobile banking: 81% of respondents ages 45 to 54, as well as 80% of respondents ages 65 and older, said they wouldn’t open a new bank account with a bank that doesn’t have a mobile app. So, taking the leap to an online bank might not be too far off for these generations. 

Click through to discover savings tricks from regular people who are sitting on millions.

More from GO Banking Rates:  
5 Best Banks With No Fees 
13 Banking Fees You Should Never Pay 
GOBankingRates’ Best Banks of 2019

Grace Lin contributed to the reporting for this article.

Methodology: This survey was commissioned by ConsumerTrack and conducted by Survata, an independent research firm in San Francisco. Survata interviewed 1,001 online respondents between Dec. 7, 2018, and Dec. 10, 2018. Respondents were reached across the Survata publisher network, where participants take a survey to unlock premium content, such as articles and e-books.

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