How To Save: Limiting Fees – America Saves Week 2014

There are countless reasons to save money. Whether it’s putting money into an emergency fund for unexpected expenses, saving for a down payment on a home or planning for your retirement – saving money helps to alleviate stress while building personal wealth.  However, saving money is easier said than done.

That’s why Ally Bank has joined the annuaAmerica Saves Week campaign to encourage more Americans to make a commitment to establish and embrace a variety of savings goals.

America Saves Week  started in 2007 in an effort to encourage Americans to save money in order to achieve their financial goals. The campaign involves more than 1,000 non-profit, government and corporate groups.

Those who have been successful saving for retirement often start at an early age and save steadily throughout their career.  But it’s not enough to save for life emergencies and retirement, it’s also important to manage the cost of saving.

Limiting Fees and Penalties

An emergency savings fund is an essential financial tool. While a regular savings account is an easy option to build savings, it won’t get you much in the way of high yields at many large banks.

Online savings accounts typically offer better yields. With Ally Bank’s online savings account, there’s no minimum deposit to open, plus no monthly maintenance fees.

Regular bank CDs are set up to hold money for a certain amount of time and are a good option for money you’re unlikely to need in a pinch. However, If you pull the cash out before the designated time period is up, you could pay a lot of money in early withdrawal penalties. This lack of easy access rules out regular CDs as a sound emergency fund option.

No-penalty CDs allow money to be withdrawn without penalty, any time after the first six days following the date you funded your account, offering the consumer convenience and easy access to their cash in a pinch.

Ally Bank’s No Penalty CDrequires no minimum deposit to open and provides daily compounded interest for maximum earnings.

Don’t Let Retirement Fees Crack Your Nest Egg

We spend most of our adult lives contributing to savings and retirement plans– so it goes without saying that you want to avoid paying unnecessary fees. No matter how generous the government – through tax incentives – or your employer –through matching contributions – you still have to be on the lookout for fees.

According to research conducted by public policy organization Demos, a higher-income dual-earner household can expect to pay as much as $277,969 in fees over a lifetime.

Cutting fees as much as possible is one sensible way of protecting a nest egg. What appear to be measly amounts can inflict mayhem over the life of a retirement account.

Whether it’s your emergency fund, your IRA, or a workplace retirement plan – maintenance fees, brokerage commissions and sales loads can easily crack your nest egg. Greg McBride, chief financial analyst at, provides  some examples :

  • A common 5.75% sales load means that for every $100 invested, only $94.25 is going to work for you. You need to earn a return of 6.1% just to get back to break-even.
  • One $10 account maintenance fee is enough to offset an entire year’s worth of interest on a $10,000 balance.
  • Brokerage commissions are fixed, so while many discount brokerages charge less than $10, this represents a 5% fee on a regular $200 investment.

“Minimizing investment expenses is the single easiest way for investors to boost their overall returns,” says McBride.

If you think your plan fees are too high, the U.S. Department of Labor has a 10 question checklist to help  you gather information about the fees and expenses paid by your plan.  

If you’re looking to roll over an existing retirement plan, such as an old 401(k) or a IRA held elsewhere, consider avoiding additional fees by opening a bank IRA at Ally Bank.  Ally Bank IRAs are FDIC insured up to the maximum allowed by law.

Pledge to Save More

To learn how to improve your savings strategy and make the pledge to save more, visit the America Saves Week website.

Take our retirement planning quiz to test your smarts and learn retirement savings rules.


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