I’m a Financial Expert: You Should Never Pay These 6 Fees
Written by
Laura Bogart
Edited by
Amber Barkley
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There are some fees in life you simply can’t avoid, from roadway tolls to the extra percentages added to many of the purchases you make every day. However, many people are shelling out for fees that seasoned financial experts would advise them against paying.
It’s easy enough to get lost in the fine print or hear the voice of Charlie Brown’s teacher warbling in your head when it comes to understanding certain elements of finance, down to those pesky, unnecessary fees. Fortunately, you have the option to turn to financial advisors who can steer you away from the monetary death of a thousand fees.
In fact, GOBankingRates talked to Ben Klesinger, co-founder and CEO of Reliant Insurance Group and Helping Hand Financial, as well as Edward Kendy, founder of BestOnlineForexBroker.com, to learn more about some of the specific fees to avoid.
Fees for Actively Managed Mutual Funds
One of Klesinger’s first major pieces of advice is to avoid paying high fees associated with actively managed mutual funds, citing studies that show how these funds often underperform when compared to low-cost index funds.
“For instance, Vanguard’s S&P 500 index fund has an expense ratio of just 0.04%, providing broad market exposure at a fraction of the cost,” he said.
High Commissions for Financial Advisors
Finding a financial advisor who can help you effectively build and manage your wealth is essential. Paying high commissions for their services is not, according to Klesinger, who counseled against going with advisors who charge high commissions.
Instead, he suggested that you go for a fee-only financial planner who only earns money from your standard fees. This approach will ensure that their interests are in line with yours and their advice isn’t influenced by commission-based products.
Fees for Complex Products
Klesinger also suggested that you stay vigilant for hidden charges and excessive fees when looking at complex products like variable annuities.
“These products can erode your investment returns,” he said. “Instead, consider simpler, low-cost investment options that offer similar benefits without the hefty fees.”
Banking Fees
If you haven’t reached a place in your financial planning journey where you’re ready to tackle more complicated products and services, odds are you’re still very acquainted with bank fees. They vex Kendy to no end, in part because they’re so avoidable.
“Overdraft fees are one of the most avoidable fees out there. I always recommend setting up overdraft protection or keeping a small buffer in your checking account,” he said.
Another point of irritation? Those annoying maintenance fees. He encouraged you to look into a bank that offers free checking accounts if you meet certain conditions, like maintaining a minimum balance or setting up direct deposits.
Credit Card Fees
Kendy also finds the annual fees associated with some credit cards to be a nuisance. He said that unless a card’s rewards and benefits substantially outweigh these fees, you’re better off with a no fee credit card.
He added that credit card owners should be wary of late payment fees, since they can impact your credit score. You can avoid these fees by setting up automatic payments and reminders.
His other piece of advice about reducing your risk of credit card fees is directed toward frequent travelers — specifically, look for a credit card that comes with no foreign transaction fees.
Subscription Fees
These fees are especially sneaky, because many of them are set to auto-renew. By the time you’ve realized that you don’t use a service anymore and want to cancel it, you’re trapped in another year.
Kendy encouraged you to regularly review your services and take an honest inventory of what you’re actually using, and go through the process of outright canceling anything you don’t use. To avoid getting stuck in the cycle of breaking out of auto-renewal, you should also be making a note of renewal dates on your calendar.
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