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$5 fees coming to an ATM near you?

By Claes Bell, CFA · Bankrate.com
Thursday, March 24, 2011
Posted: 11 am ET

JPMorgan Chase is testing out a plan to boost ATM fees for noncustomers in some markets to $5 per withdrawal. From ABC News:

The new fees could be especially costly for people who withdraw cash from another bank's ATM. Chase is now charging Illinois residents $5 every time a non-customer withdraws money from a Chase ATM. That's in addition to any fees charged by the customer's bank.

$5 ATM fees for noncustomers may soon be the norm

Chase's $5 ATM fees for noncustomers may soon be the norm

"Wow. That's steep," says Gerri Detweiler, Credit.com's personal finance expert. "Even if you take out $100 at a time, that's still an expensive way to get at your own money."

Chase also is experimenting with a $4 fee for non-customers in Texas, said Christine Holevas, a spokeswoman for JPMorgan Chase. TD Bank recently stopped reimbursing its customers for fees incurred through the use of other banks' ATMs. Pittsburgh-based PNC Bank did the same for its free checking account customers, a spokesman for the bank said.

A $5 ATM fee may seem like a small issue in the scheme of things, but when you look at the numbers, they're kind of astounding. Not only are you going to get that $5 ATM fee for using a Chase ATM if you're not an accountholder, but your own bank will likely charge you a fee of around $2 for using an out-of-network ATM, so now you're out $7. If you're withdrawing $20 to pay your friend back for dinner, that amounts to a 35 percent fee to withdraw your own money.

On the other hand, I can't say this move is surprising. Chase has been pretty aggressive about exploring new fees and limits on its checking accounts lately, and they're not alone. Since the passage of Dodd-Frank, banks have been loudly warning that the law's increased regulatory burden and limits on debit-card interchange fees would force them to raise fees charged to checking account customers and ATM customers.

As banking consultant Bert Ely told me late last year when I was interviewing him for our 2010 Checking Study, "It's like squeezing a balloon. The revenue balloon is getting squeezed in places, so to get the same amount of revenue, it's got to bulge out someplace else."

On the other hand, a lot of Dodd-Frank's implementation is hardly settled, and I suspect some of this is just saber-rattling on the part of the banks, who are trying to get public opinion on their side and put political pressure on regulators to back off.

In the end, the market will decide how much banks can charge for ATM withdrawals, just as with many other types of fees. Likely, a lot of people will just pay the fee, as they have with steadily increasing ATM fees since the things were invented. As our own Greg McBride told ATM Marketplace:

"There is very little downside when a bank raises its ATM surcharge fee," said Greg McBride, senior financial analyst at Bankrate.com, which is based in North Palm Beach, Fla. "There is very little backlash from non-bank customers who pay the higher surcharge fee."

But I also think $5 is high enough to induce sticker shock and send some potential ATM customers to the corner Wallgreens or CVS to buy a pack of gum and get cash back instead. It's true that Chase has a lot of market power, and their decisions about fees have broad influence in the banking industry. But $5 might be a bridge too far for a lot of people.

What do you think? Is a $5 ATM fee reasonable? Will people just pay it, or will they avoid Chase ATMs?

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23 Comments
Joe Schhmoe
March 31, 2011 at 12:19 pm

It is bank robbery of another sort... the bank is robbing people instead of being robbed. Such bankers can go to h*ll.

Dave
March 31, 2011 at 12:18 pm

As a retired military member I use USAA for all my banking needs. Vets and dependents of Vets can also use USAA. I pay no charges for anything and even get a rebate at the end of each month for ATM surcharges for other banks and debit card rebates. It's ludicrous that people should pay fees to use their own money at their own bank and criminal the fees charges by banks such as Chase is attempting to charge. My father was a business man and used Chase until he realized what a bunch of crooks they were and dropped them like a dirty pair of socks as soon as he could. Shame on them, fats cats just trying to get fatter!

KottaMan
March 31, 2011 at 12:14 pm

I am old enough to remember very well the initial implementation of ATM's by banks. Prior to that, banks employed real live tellers. The "excuse" for bringing in ATM's was to give "better customer choices." Well, the real reason was to cut the number of tellers, reduce the labor expense, and puff up profits. For a bank to charge me to access my own money is unadulterated BS. They make enough off the interest on my money so they should be paying ME. Good deal... pay me 1/2 percent and be able to loan out my money at anywhere up to 29-percent. Give me a break!

saidwhat
March 31, 2011 at 11:31 am

Credit Unions,,,,,,,,,Here We come.......

Roman
March 26, 2011 at 8:40 pm

Well, Chase is in fact a very greedy bank.

I was Washington Mutual customer. Loved that. First free checking in the industry. Credit card with free credit report. Free cashiers chesk for customers. Free check books. Free wire transfers. Frendly staff. One overdraft fee a month waived. It is all gone. Chase took over in a matter of a blink in the transaction that still raises question. First was free credit report to go into the history. Then everything else. I never liked them. I still keep my WM credit card, now obviously CHase, is to keep it on my credit report. I hardly use it. Especially after promicing 5% cashback on grocery transactions they gave 1% instead, listing local grocery chane Giant Eagle as a "general merchandaise".
I bank with the bank, that reimburses me for other banks ATMs fees. I dont abuse it. In fact, for last 4 month I used it just 2 times. If this is to go, I wont use other bank ATMs then at all.

I do not believe in paying fees to get ahold of my own money. $2 is ridiculous, not to mention $5. And that's true, I will go to CVS and buy $1 gum, getting free cash back.

Meagan M Bell
March 25, 2011 at 1:51 pm

I agree. $5 is WAY too much. Usually you can find a different bank within a few blocks of a Chase bank and a $5 fee would be worth the drive/walk for me! I understand that banks are for profit and have expenses too but this is a terrible way to make ends meet.

Debra James
March 25, 2011 at 1:29 pm

In most situations there are alternatives to paying the bank the ATM fee. For the same $5 or less, you could go into a local grocery, convenience or drug store to spend that money on something tangible and get cash back up to $50 or $100. I am not saying that you won't be paying to get to your own money; just pointing out that you have choices on what you can get in return for paying a fee.

I would only be willing to pay the fee if I had to have cash at that moment, and there was no other less expensive method for me to get my money.

Anonymous
March 25, 2011 at 9:29 am

Chase sees this as an opportunity to bring those non-customers into their offices to make them customers.

It used to drive me CRAZY when my husband would go to another bank to pull from the ATM. First, bc he totally ignored the fact that there were fees, second bc our bank was EVERYWHERE in our state. He had a branch of a different bank next door to his job and rather than walk a block to a branch of our bank he would pay the fee! That's just laziness and stupidity.

When people open bank accounts, it should be a well thought out process. I bank at the bank I am employed by, bc obviously there are benefits to that, however, if I was in a situation where I did not have several branches close to where I live and work, I would re-think that. You need to think about all of your financial needs and find the products and companies that fit those needs.

People fail to remember that banks are not non-profit organizations. They are in business to make money. Every single thing you do through your bank costs money to process. "Internet and technology" make people think that this lowers the cost of doing business...it doesn't! To have that website, you need developers, tech support, customer service, hardware, software etc. It still costs money to power! The new laws that were put in place to "protect" consumers, were (as usual) not thought all the way through. Of course an company is going to have to search out other ways to make up the revenue that those laws lose.

I'm not saying that there is not some level of greed involved in the decisions of these companies, but really that is what they are in business to do. Make money as a company AND for the sake of their shareholders.

boethius
March 25, 2011 at 4:47 am

Overdraft fees, "out of network" ATM fees, monthly service fees . . . when does it stop? The saying that a banker knows how to turn every dollar you deposit into five dollars (loans, credit cards, and one fee after another) is all too true now except I think they've learned how to turn every dollar into at least ten dollars. In a technological age inter-bank financial transfers should simply be unheard of. Yes I understand considerable infrastructure and therefore dollars goes into financial transaction networks but the notion that we must constantly be dinged for additional fees to pay to run what they have to have anyway is silly not to mention the expense is heavily amortized over time.

Sheyna Steiner
March 24, 2011 at 4:16 pm

$5 would be enough for me to walk away. It would be pure desperation to pay it. Really, paying $3 is galling but $5 crosses a line for me.