Large financial institutions are struggling to recover from the mortgage crisis, credit card defaults, and loss of clients to the economic downturn. In attempts to make up the shortfalls and respond to stiffer federal regulations, most of the very large banks have implemented new ATM fees to increase their revenue. Across the United States in 2010, ATM fees totaled $7.1 billion in additional income for the banks. The financial sector considers this a very small part of their income streams.
Most people are aware of the cost of withdrawing funds from an ATM that is not owned by their bank. Some bank customers will be surprised to learn that many of the benefits attached to their checking accounts are going to be disappearing in the near future. There are some extensive changes that will make the use of any ATM more expensive and consumers must be aware.
New ATM Fees
Banks offer unlimited ATM withdrawals to their checking account customers from the ATMs that are directly owned and managed by the bank. Even customers who have held “free” checking accounts have enjoyed the privilege of using the bank-owned ATMs for convenient access to cash. Major banks have made some significant changes, which include:
1. Non-customer usage fee – For customers of other banks who wish to access the ATM, the fee will increase from three dollars to a staggering five dollars in many locations. In addition, the customer’s bank will assess a three dollar surcharge for the transaction.
For example, if the customer wishes to withdraw $20 from the ATM belonging to another bank, the fees that will be assessed to the checking account could be as high as eight dollars, or 40 percent. If the ATM is owned by a third-party, there might be an additional surcharge of two dollars. In total, in this example, the customer could pay an additional $10, or 50 percent, for that last minute $20 to each lunch with a friend. Chase has even tested out $5 ATM fees in some locations.
2. Reimbursement of fees to cease – Up until now, customers who used ATM’s belonging to another institution might enjoy the benefit of being reimbursed for the other banks usage fee by the institution holding their checking account. This beneficial repayment will no longer be offered to customers at some banks. The financial institutions claim this is a substantial expense that must cease in light of new federal regulations that are costing banks money in other areas.
3. ATM fees on free checking accounts – For customers who enjoy the benefits of a free checking account without a minimum balance, banks have provided the same benefits for ATM usage and fee reimbursement as preferred checking account customers have enjoyed. Banks are changing this policy and requiring “free” checking account customers to pay for ATM usage or upgrade to a preferred checking account with a minimum balance if they wish to use bank-owned ATMs.
4. Minimum balance required - Checking account customers must maintain minimum balances to utilize the ATM without paying usage fees. Some banks have raised the minimum balances required to as much as $1,500, and if that balance is not maintained ATM usage fees are assessed on bank-owned ATM transactions.
5. Annual ATM card fee - Banks that have offered free ATM cards to their customers in previous years will begin to assess annual fees on all ATM cards. Some institutions are limiting the number of ATM transactions each month that are free to their clients even on bank-owned ATMs. Clients who wish to access the ATM more than the pre-set limit will pay fees for each additional transaction.
Causes for ATM Fee Changes
Although banks have gained substantial revenue from the convenience of ATM usage from customers and non-customers alike, the banking industry states the following reasons for the additional ATM fees that will be assessed.
1. Cap on debit card fees – Federal regulations will be imposed on the actual amount a bank can charge a merchant for each point of sale debit card transaction. Banks anticipate substantial loss of revenue for debit card use by their customers and are seeking to make up that projected loss by increasing ATM fees on non-customer transactions.
2. ATM network costs – The banking industry states that the maintenance cost for each ATM is $12,000 to $15,000 every year for their bank-owned ATMs. In addition to the cost of maintaining the machine is the cost of being part of ATM networks since most of the network ATMs are owned by third-party companies. Charging higher ATM fees is usually preceded by increases in network fees. When the banks incur additional costs of doing business, those charges are passed along to their customers in the form or additional fees.
3. Discourage non-customer users – Even though banks make a great deal of money from the non-customer users of their ATMs, most institutions would rather charge high fees to non-customers to reduce non-customer usage. When fees are considered very affordable, the ATM will spend more time off-line for being out of cash because non-customers will use the machine often. Raising the fees for non-customers means that checking account customers will have access to cash from bank-owned machines.
What Consumers can Expect for the Future
Until major financial institutions are able to build up their depleted reserves, higher banking fees will be part of the cost of having ready access to cash. Bank customers will notice substantial changes for every transaction, and non-customers will pay exorbitant ATM fees. One of the reasons that banks will raise fees on non-customers is the fact that people who use their ATMs are paying for convenience. Even if complaints are filed against the banks, they are not at risk of losing customers. Smart consumers will plan ahead and make changes to their personal habits to avoid excessive fees for using an ATM.
Author Bio: Alyssa is a freelance writer and credit card expert. She contributes for a credit card website. When she is not researching credit card money saving tips she can usually be found heading to the library.