Americans lost an average of almost $1,000 to financial errors in 2025. Here are 3 big money mistakes to leave behind this year

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.

The high price of low financial literacy

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.

Credit card convenience gets costly

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.

The hidden risks of overdraft protection

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.

Luxury spending without a luxury budget

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).