Hidden fees to watch

Here are five fees to watch out for.

1. Bank service and maintenance fees

Many financial institutions charge monthly maintenance fees if your bank account’s balance is below a certain level or if you do not make enough deposits each month. Each bank has different rules, but you can look for a financial firm that offers accounts with zero monthly service fees or clear ways to avoid the fee.

Reviewing your bank’s fee schedule will reveal all of the different costs you may face. If the fees are excessive, consider switching to another bank.

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2. Investment fund expense ratios

The expense ratio reflects the annual cost of holding a fund’s shares, often for the portfolio manager or other expenses related to managing the fund. Although the expense ratio may look like a small number, it compounds over time.

Broad market index exchange-traded funds (ETFs) often charge less than 0.05%, and investors can typically find fees of less than 0.25% in most ETFs categories, according to Morningstar. Opting for these instead of higher-cost active mutual funds are one way to lower your costs.

3. Financial advisor commissions

Some people turn to financial advisors for help, but their services can be costly if you aren’t careful. Financial advisors’ fee structures vary but some who manage portfolios collect a management fee each year, often equal to a percentage of the portfolio’s total value.

You should compare fees and only work with fiduciary advisors who are required to serve in your best interest. That way, you won’t be led to unfavorable financial products just so the advisor can collect a commission.

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4. Insurance product charges

The premiums on life insurance, auto insurance and other policies can increase over time.

You can mitigate the effect of rising premiums by reviewing your coverage regularly and comparing other insurance policies. Just as you don’t have to be loyal to the same bank if you find a better option, you can switch insurance carriers.

5. Credit card annual or inactivity fees

Most people know about credit cards having high interest rates, but some cards also have annual fees. You can review your credit card’s fee schedule to make sure you aren’t stuck with unnecessary expenses.

While closing a credit card account can hurt your credit score, you may want to get rid of a credit card with a high annual fee to save money.

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How to spot and eliminate hidden costs

Review the fee schedules of the financial products that you use. Comparing them with a few options can help you gauge if you are getting a good deal with your current financial institutions.

While it can take time to audit fees and make sure you aren’t overpaying, this process can pay off.