ATM fees are an unfortunate fact of life for out-of-network banking customers. Now ATM fees are on the rise, as banks look to recapture the overdraft fee money lost to the Dodd-Frank Wall Street Reform Act. According to the Huffington Post, all JP Morgan Chase customers could face $5 ATM fees very soon.
Chase ATM fee in Texas, Illinois
Banking giant JP Morgan Chase has begun charging non-customers in Illinois $5 to use a company ATM. In Texas, it’s $4. If Chase’s ATM fee increases produce enough revenue, the company has told the Wall Street Journal that the increases will go global, sending even more customers in search of short term loans because they’ve been charged an exorbitant amount to access their own funds.
According to Bankrate.com senior financial analyst Greg McBride, Chase’s $5 ATM fee is just the latest in a wave of changes sweeping the banking industry. As banks expect to lose billions of dollars in revenue once Dodd-Frank provisions involving overdraft and other fees fall into place, the “too big to fail” financial monoliths are passing the inconvenience on to customers.
“The reality is that bank revenue is being squeezed by regulatory changes and the banks are going to be accounting for that in other areas,” said McBride.
Maintaining ATM networks is another expense cited by banks, as building and maintenance aren’t cheap. However, a Wall Street Journal study found that most of the 425,000 ATMs in the U.S. aren’t even owned by banks.
What’s going on behind the curtain
Consumer advocates believe that big banks are making noise about allegedly being forced to charge non-customers $5 at the ATM in order to drum up sentiment against the Dodd-Frank act, and consumer-oriented financial reforms in general. A lawmaker may hear this and be swayed. A consumer, on the other hand, may be too busy tracking down a short term loan to make up for the higher ATM fees to care about a bank’s problems.
The reality of the matter, according to consulting firm Oliver Wyman, is that banks generated $7.1 billion in total revenue from ATM fees in 2010. Of that chunk, $3 billion came specifically from banks charging their own customers for using another bank’s ATM, reports the Wall Street Journal. Non-customer ATM fees may only have accounted for 1 to 2 percent of total pre-tax operating profit for banks, but that’s still billions of dollars that the banks are scrambling to replace.
More customer restrictions
Chase’s $5 ATM fee is yet another prohibitive mark against the bank in the span of a week, as it is also considering a $50 cap on debit card transactions. Still, low to no monthly fee ATM and debit cards are a selling point for banks. Higher ATM fees are hidden in the fine print.
“It’s easy to compare debit cards by looking at the monthly fee, so banks are going to try to minimize the monthly fees and load you with (ATM transaction) fees,” said CardHub.com CEO Odysseas Papadimitriou.