Some banks have started raising fees (or imposing new ones) on customers who withdraw money from ATMs, according to Wednesday’s Wall Street Journal. The move is a part of the banks’ strategy to recoup their financials from the impact of various financial regulations.
Banks such as JPMorgan Chase & Co. (JPM), PNC Financial Services Group Inc. (PNC) and The Toronto-Dominion Bank (TD) have already changed their policy regarding ATM usage in order to collect more fee income. Though other banks including Bank of America Corporation (BAC) and Citigroup Inc. (C) have not issued any fresh guidelines about ATM withdrawal fees, they are also contemplating such a move.
JPMorgan hiked its ATM fees for withdrawal from non-customers to $4 and $5 in Texas and Illinois, respectively, on a trial basis. These two states are the biggest retail markets for the company, together accounting for nearly 3,600 ATMs. If the trial is successful, the company will implement it all over the country. Currently, the company charges $3 for non-customers withdrawal in other states.
Recently, PNC Financial had also stated that from September the company will stop reimbursing its customers’ ATM fees that use non-company ATMs and will charge $2. Furthermore, the company also announced that in order to avoid the ATM fees, the customers must open a Performance Checking account. Also, they should have $1,500 as balance or pay a $15 monthly fee.
Similar is the case with Toronto-Dominion Bank. The company recently discarded its policy of letting its customers use other banks ATMs free of charge. Now the company is charging most of its customers $2 for using non-company ATMs.
Over the next few months more banks are likely to follow suit. Some of the financial institutions recently introduced checking account fees, in order to make up for lost revenues due to the imposition of various provisions (like the Durbin Amendment) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Banks do not charge customers who take money out of their own ATMs. But for using other banks’ ATMs, the customers at times are charged by their own bank as well as the company operating the ATM. Hence, for a single ATM transaction, the fees may reach a double digit figure for the customer.
Approximately two-thirds of the total ATMs in the country are located outside the bank branches and are mostly owned by non-banking companies such as Cardtronics Inc. (CATM). The fees on these non-banking ATMs differ greatly. Also, according to American Bankers Association, banks spend nearly $12,000 to $15,000 per year on the maintenance of each ATM. Hence, they are justifying the increase in ATM withdrawal fees.
But, with an increase in ATM withdrawal fees, customers may lower their usage of ATMs and instead visit the bank branch to withdraw money.
Though the financial regulations are being imposed to prevent another economic crisis, many of the provisions in the regulations are such that they are leading to revenue losses for the banks. Hence, in order to make up for these losses, the banks are ultimately passing on the costs to the customers in the form of various fees and charges. The regulators are trying to make the financial institutions stable, but customer woes are increasing.
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