Americans are getting smarter with money, but financial mistakes still cost the average adult almost $1,000 each a year.
According to the latest National Financial Educators Council (NFEC) survey, Americans lost an average of $948 to mistakes made because of a lack of personal-finance knowledge in 2025. Across a nation of approximately 260 million adults, that adds up to $246 billion down the train.
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Fumbling almost a grand hurts, but the good news is that it’s the lowest reported in the past seven years of the survey.
The year 2022 was especially bad, with the average amount lost reaching $1,800 during a time of painful inflation. The second-worst year was 2020, when the average loss clocked in at $1,634 amid lockdowns, job losses, and pandemic panic.
Just under half (48.6%) of Americans surveyed reported losing at least $500 in 2025 due to inadequate financial literacy; for one in seven, it was $2,500 or more. Just over 4% said their lack of financial knowledge cost them at least $10,000 (1).
Three common money mistakes accounted for the most expensive errors, costing Americans billions collectively last year. Here’s what they were — and how you can avoid the same fate.
Racking up credit card interest and fees is by far the most expensive financial mistake most Americans make, adding up to an eye-watering $120 billion nationwide as of 2022, according to the Consumer Financial Protection Bureau (CFPB) (2). Nationwide, according to the Federal Reserve, credit card balances reached $1.23 trillion during the third quarter of 2025, an increase of $24 billion on the previous quarter (3).
Also according to the Fed, the average interest rate on credit cards issued by commercial banks reached nearly 21%as of November last year (4), while new card offers are now averaging just under 24% according to LendingTree (5). At those levels, carrying a balance, even for a few months, can inflate the effective cost of purchases — especially for borrowers with lower credit scores, who tend to face the highest rates.
Paying on time each month, avoiding carrying a balance, and prioritizing balance paydowns of the highest-interest debt can help prevent interest charges from compounding further.
A balance transfer might be a way to get some breathing space on a debt that has been carried over month to month for a while: transferring your balance to a card offering an introductory 0% rate could buy you some time to pay down your balance.
Overdraft protection can be more expensive than most Americans realize. Among retail banks, the median fee for overdrawing a debit card is $34, according to the CFPB, and most of these fees are on transactions of $24 or less (6). All together, the CFPB estimates that consumers spend $17 billion on overdraft and non-sufficient funds (NSF) fees (1).
The simplest way to avoid overdraft fees is to regularly monitor your account balance and keep a buffer to cover upcoming transactions.
Seeking a fee waiver sometimes meets with success, particularly as a courtesy on the first overdraft charge (7).
There are several ways to reduce the risk of getting dinged with an overdraft charge, like setting low-balance alerts or agreeing to automatic transfers from other accounts. Although overdraft protection prevents your transactions from being declined, the fees add up fast, and can quietly drain your account. Opting out eliminates that risk.
We know Americans are far too quick to whip out their credit cards, but what are they spending all that money on? Well, in part, it’s things they definitely don’t need.
The U.S. luxury goods market was worth $115.22 billion in 2024 (8), and American consumers were responsible for approximately 21% of global luxury revenue (9).
According to a 2024 LoopMe survey, 70% of U.S. consumers report purchasing luxury goods or apparel each year, and a third of those consumers say they spend at least $1,000 on premium goods annually (10).
Almost one in three (31%) luxury shoppers polled by YouGov in 2024 said they planned to spend more on high-end purchases in the year to come than in the past year (11). In a different survey, almost three quarters (72.6%) of luxury shoppers said they plan to maintain or increase their luxury spending (12).
While splurging occasionally in the context of a broader budget can be a good way to mark a special occasion or acquire an investment piece, purchasing premium goods with credit is a recipe for snowballing debt.
Experts recommend treating this kind of high-ticket discretionary spending differently from spending on necessities: pay for optional purchases with fun money set aside for the purpose and within clear limits (13).
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National Financial Educators Council (1); Consumer Financial Protection Bureau (2); Federal Reserve Bank of St. Louis (3); Federal Reserve Bank of St. Louis (4); LendingTree (5); Consumer Financial Protection Bureau (6); Consumer Financial Protection Bureau (7); Research & Markets (8); Bank of America (9); Loopme (10); YouGov (11); eMarketer (12); Ramsey Solutions (13)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
