While it can certainly come to that, start by routing out those pesky fees that you don’t know you’re paying or hate that you’re paying. They’re lurking everywhere — on your credit card statement, in your 401(k) — and can sneak up on even the most careful spender.
Here are some places to scour for fees and bid them farewell:
1. Your Credit Card
There are an average of six fees on every credit card, according to a CreditCards.com survey. You’ll be slapped with fees for stepping out of line, like if you’re late in paying your bill, but you could also be hit with fees depending on how you use your card, like if you’re trying to take out a cash advance, transfer a balance or swipe your card outside the U.S. Plus, don’t forget the hefty annual fee attached to a lot of cards.
These fees are a windfall for credit card issuers: In the U.S., issuers earned $94.3 billion from card fees in 2015, according to research firm R.K Hammer. This is up from previous years, but largely because consumers are spending more. (Credit card issuers make money every time you swipe your card.)
The goods news is that these fees can easily be avoided. Start by taking an inventory of your cards. If you travel internationally, do you have a card with no foreign transaction fee? For rewards cards with an annual fee, are you earning the money back and then some? While you don’t want to hold onto cards that are costing you money, think twice before closing them, since that will ding your credit score.
Whenever possible, pay your credit card bill on time and in full every month. You’ll avoid fees and interest payments, plus you’ll be building good credit.
2. Your Prepaid Debit Card
Cards that you preload with cash are infamously laden with fees. Consider the $9.95 activation fee with the Edge RushCard or the $1 fee you fork over for every purchase with the NetSpend Card. They aren’t all this way, but some two thirds of prepaid debit cardholders pay some sort of fee, according to the Federal Reserve Bank of Philadelphia.
The takeaway: It pays to be very choosy here. The Bluebird by American Express AXP -0.38% and WalMart has been hailed as the top prepaid card by Consumer Reports and is one prepaid card where the fees are few and far between.
3. Your Bank Account
In 2015, only 46% of banks offered free checking accounts, according to financial services research firm Moebs Services.
To avoid getting hid with fees for the privilege of stashing your money somewhere safe, you have to play by their rules. That means you have to know the rules. As obvious as that sounds, Lauren Gensler learned the hard way with her basic Bank of America BAC -0.51% checking account (which she opened, and had been meaning to close, since she studied abroad in college). At one point her balance dropped below $1,500, which unbeknownst to her, meant she incurred a $12 monthly maintenance fee. It took her three months to call, but when she finally did, they agreed to waive the fees. (She didn’t even have to launch into her prepared speech about how she’s always been a great customer.)
Take the time to pick up the phone. Nearly 90% of people who asked for a late fee to be reversed were successful, according to a survey by CreditCards.com.
4. Your Investments
There’s only one thing you can control when it comes to your investment returns: the fees you pay. If you’re not careful, you could end up spending a big chunk of change on pricey funds you don’t need. Let’s say you park $10,000 in an investment account for 30 years. If you paid just 0.18% in fees (instead of 1.01%, which is closer to the average), you’d pocket an extra $12,000, according to Vanguard.
Check the expense ratios on funds you currently own and see if there are lower-cost index funds or ETFs available. An easy way to do this is through FeeX, which lets you plug in your 401(k) and other accounts and analyzes the fees you’re paying.
5. Various Subscriptions And Memberships
Go through your credit card or bank account statements with a fine tooth comb and see if you can locate any stray, unnecessary fees. Did you forget to cancel your CBS All Access pass after the Grammy’s? What about a membership for Dropbox you never use or a subscription to a magazine you rarely find the time to read? As this couple learned, monthly subscriptions can add up. Use them or lose them.
If you get a new credit or debit card, make sure to update that with the companies that regularly bill you. Otherwise you could get hit with – you guessed it — more fees.
There will always be unexpected expenses with travel. Yet, by thinking ahead, you can keep annoying fees and surcharges to a minimum. For instance, consider a credit card that lets you check your bag for free or waives certain fees. When it comes to reservations, figure out the cancellation policy before you book and research hidden fees, like a hotel resort fee or surcharge for picking up your rental car at the airport. Before you hit the road, use Google to scout out driving directions without toll booths and don’t assume there will be free parking where you’re going.