66 KIPLINGER’S PERSONAL FINANCE^ 02/2020REWARDS
stores, including Kroger and Harris
Teeter, may charge a fee.Monthly maintenance fees
Typical amount: An average of $15.05
for interest-bearing accounts and
$5.61 for non-interest-bearing ac-
counts, according to Bankrate.com
How to beat them: Most checking ac-
counts waive the monthly fee if you
keep a minimum balance or have a
direct deposit or regular transfer.
That may be worthwhile if you prefer
banking with big institutions, which
usually impose such requirements,
or you keep enough in your checking
account that meeting a minimum is
of little concern. Otherwise, look for
free checking—accounts from several
online banks, including Ally Bank In-
terest Checking and Capital One 360
Checking, charge no monthly fee. (For
more on attractive no-fee accounts, see
“Free Checking With Benefits,” Jan.)Overdraft fees
Typical amount: An average of $33.36,
according to Bankrate.com
How to beat them: If you’re enrolled in
a service through which your bank
covers any overdraft of your checking
account, you may be hit with a stiff fee
for each transaction that dips below
your account balance. Many institu-
tions let you link your checking ac-
count to a savings account (or other
backup source of funds) and will auto-
matically transfer money to checking
if you overdraw your account—typi-
cally free or at a lower charge than
for a standard overdraft. Or you could
opt out of overdraft protection, and
your debit card will be declined at the
register if your checking account is
short on funds—though you could still
be charged an insufficient-funds fee
for electronic transfers or checks that
exceed your account balance.INVESTING
Asset-management fees
Typical amount: About 1% of your
investment balanceHow to beat them: If you’re paying
a professional a percentage of your
assets under management, consider
whether a different payment structure
may be more appropriate and less
costly. If you’re looking for less em-
phasis on investment advice and more
of a focus on general financial-plan-
ning guidance, such as determining
when to take Social Security or how
to balance college and retirement sav-
ings, you may benefit from paying an
adviser a subscription or hourly fee,
says Christine Benz, director of per-
sonal finance for Morningstar. Such
fees may also make sense if you con-
sult your adviser infrequently. Advis-
ers in the Garrett Planning Network
(https://garrettplanningnetwork.com)
offer services on an hourly basis and
typically charge about $180 to $300
per hour.
Or consider switching to a robo
adviser, which usually provides
basic, automated investment ad-
vice, including how to best al-
locate your portfolio. Some
robo advisers offer op-
tional assistance from a
human, too. Betterment,
for example, charges a
0.25% annual fee for
its basic Digital ser-
vice or 0.40% to
get phone access
to an adviser with
its Premium plan
(wh ich requires
a $100,000 mini-
mum investment).
For more on robo ad-
visers, see page 18.Expense ratios
Typical amount:
An average of
0.48%, according
to Morningstar
How to beat them: A
mutual fund’s expense
ratio represents the
amount of your invest-
ment that goes toward
operating expenses.Many actively managed funds charge
well above the average. If you made an
initial investment of $10,000 in a fund
that charges 1%, contributed $1,000
a year to it and earned a 6% rate of re-
turn, you’d pay about $20,000 more
in fees over 30 years than if you chose
a fund with a 0.25% expense ratio.
On a positive note, the average asset-
weighted expense ratio, which ap-
proximates how much investors
actually pay rather than what funds
charge, has dropped every year since
Morningstar started tracking it in- The reason: competition from
the plethora of index mutual funds
and exchange-traded funds. “Index
funds and ETFs are your friends if
you’re looking to lower your portfolio’s
total cost,” and you can easily assem-
ble a well-diversified portfolio with
fees of 0.1% or less per year, says Benz.