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$5 fees coming to an ATM near you?

By Claes Bell · 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
bebo8973
April 17, 2011 at 6:50 pm

Why not charge $395.99 per withdrawal? Sky's the limit right?

Sharon
April 17, 2011 at 6:11 pm

Banking is a convenience.The best way to take care of this is the way one of my friends does it. She gets her check in the mail, cashes it at her bank. She then gets cash and pays her bills weather cash or money order. yes they cost sometimes also. She keeps the rest of the cash and knows that this must last until payday and thats that. Pay with cash avoid the fees and live in the past. No debit no charge etc. Yes I believe that if we do it this way they will find others fees to tack on cause they have to make money also.
Welcome to the future.

al
April 17, 2011 at 5:14 pm

another banks will screw people the actual cost for using another bank card in another banks machine is under a dollar

Jason
April 06, 2011 at 8:10 pm

amazing how many people read this wrong.

If you use your chase debit/atm card to withdraw money from a chase ATM its no fee. now if you slip up and use your non chase card, then expect a $5 fee.

Kathy
April 03, 2011 at 10:12 am

I am disgusted that my own bank would penalize me to take out my own money. It makes me so angry that I want to withdraw all of my money, and maybe I WILL! I will go to a bank that VALUES its customers not penalizes them!!!

bobby
March 31, 2011 at 1:17 pm

They will get my 5.00 when they pry it from my cold dead hand.

Dona
March 31, 2011 at 1:01 pm

Solution=Boycott both JPMorgan Chase ATM machines and JPMorgan Chase, period. Enough is enough! All of these fees are just another ploy on the part of banking industry CEOs' to maintain their outrageous pay packages! They just can't accept that "the party is over" at their own doing!

James Reis
March 31, 2011 at 1:01 pm

This article is not telling the complete story and is dispenseing incorrect information. I own and operate a small company that provides ATM's throughout my state so I know about the industry.
First - banks do not own and operate all ATM's. Banks only own 35-40% of ATMs in the nation. Small business owners own the majority of the machines and, like everything else, small business can compete with the banks and offer less expensive ATM fees than the banks. Need cash - don't go to a bank ATM! Instead seek out an independant ATM where the fee will be less. By law the owner of the ATM must display who owns the machine and what the fee will be. Small business ATMs also operate under the sames regulation and law as the banks.
Second - When using a non-bank owned ATM the fee you pay is NOT to aquire YOUR money. The money in that machine is my money - not yours. It is cash that I purchased from my bank. The transaction fee is a small convenience charge that saves you time and gas if you are looking for a branch of your bank. Part of that fee also pays the location owner who rents the two square feet of space for my machine as well as providing revenue to pay for my service trucks, technicians, and office staff. What little that remains is profit for my company.
Third - If you want YOUR money then go to YOUR bank and use their ATM at no charge. Also consider that people routinely complain about ATM charges of $2-3 which is 2-3% per hundred dollars yet these same people will walk into their bank and ask for loans and, without a word, sign documents that require payment of interest that may range from 4% to 12% depending on the loan. And the money they loan you IS YOUR MONEY. So - you complain that I charge 2-3% for convenience yet you smile about paying 4% or much more to get YOUR money from YOUR bank.
So, always look for a NON-bank owned ATM if you want lower fees. These lower fees with either save you money or will at least offset any fees your bank my charge for using a non-bank owned ATM.
All the information you need about an ATM is posted on the machine. This is required by law. Like everything else it's up to you to educate yourself on how things work.

SZ
March 31, 2011 at 1:00 pm

BIG $5.00 for ATM FEES just to take out your very own hard workng money. This is coming to a very very greedy country. THey alreasy get you on not using your bank ATM machine costing you more doubled the fee on your money. Soon there will be more people walking away from the ATM's all toghter. Now that comcast cable alreasy raised thier services long time customers are saying enough is enough and droping them like fly paper. Think about clothing and food prices already raiseing as well. Then you can't forget about the gas prices climbing the ladder to $4.00 a gallon and will be gong up wven higher.

Ossylady
March 31, 2011 at 12:53 pm

Back to the 'under the mattress days' for that little extra cash. Just say NO to ATM fees, just get a little extra at the grocery check out if needed at least till they start with the fees too.If everybody withdrew there money from banks for a few days. The banks would hear and maybe pay attention. Banks make more than enough on the money they already hold for us. All these extra fees are necessary to keep the fat cats in heavy paychecks, bonuses and golden parachute retirements. Why should we pay for that?