Coming Soon: The Five Dollar ATM Fee(blogs.wsj.com)
blogs.wsj.com
Coming Soon: The Five Dollar ATM Fee
http://blogs.wsj.com/deals/2011/03/16/its-coming-the-5-atm-fee/
41 comments
In the UK, 97% of ATM transactions are done using free-to-use LINK-network ATMs (http://www.link.co.uk/ & http://en.wikipedia.org/wiki/ATM_usage_fees#United_Kingdom). I feel that there are situations where pay-to-use ATMs are acceptable as a matter of convenience (convenience stores, subways, airports, etc.), but it boggles my mind that I can go to RiteAid to buy a $1 juice bottle and withdraw $40 without penalty, but to use the Chase ATM across the street (I'm a Bank of America customer) I have to pay Chase $2.75 AND Bank of America a $2.00 out-of-network-ATM fee.
Maybe that'll be enough pricing pressure for someone to fix that stupid system. Routine transactions shouldn't cost 2 bucks a pop.
Not sure how that works when the banks control too many of the pieces, though.
Not sure how that works when the banks control too many of the pieces, though.
Go Credit Unions.
My credit union refunds ATM fees charged by other banks, and through their CU network, all CU ATMs are free, and I can even walk into networked CU and do some operations as if I were at the local branch.
Don't support the criminal banksters who aren't beholden to their depositors.
My credit union refunds ATM fees charged by other banks, and through their CU network, all CU ATMs are free, and I can even walk into networked CU and do some operations as if I were at the local branch.
Don't support the criminal banksters who aren't beholden to their depositors.
The basic (and only) credit card my CU offers is fantastic. 10.90% flat APR on EVERYTHING, and absolutely no fees. (This even includes cash advances.)
To me, credit unions are truly a "hacker's" bank. No frills or gimmicks leaves room for more savings and better customer service than commercial banks. Kind of like getting a barebones unmanaged VPS compared to managed shared webspace from GoDaddy.
To me, credit unions are truly a "hacker's" bank. No frills or gimmicks leaves room for more savings and better customer service than commercial banks. Kind of like getting a barebones unmanaged VPS compared to managed shared webspace from GoDaddy.
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+1 for credit unions.
The difference in fees and policies easily amounts to several hundred dollars per year for us.
The difference in fees and policies easily amounts to several hundred dollars per year for us.
The main issue banks are dealing with is the Congressional move to limit debit card interchange fees. I have spent a good part of the past 25 years working on systems that allow acquiring banks to claim the lowest interchange fee. It's not a trivial process, and acquirers and merchants make significant investments to improve things at the point of sale. They expect to recoup some of that investment by paying lower interchange fees. For a simple example, one of the earliest (circa 1985) distinctions was between electronically-capture and paper-keyed transactions. Electronic qualified for a lower fee because it was more secure, more accurate, and more timely. Then within electronic-capture, the networks began rewarding quicker deposits--deposit within 7 days and pay a lower rate, then 3 days, then 1 day. Now there are many, many (perhaps 100's) of fee programs worldwide, with each card network having its own rules and technologies. By crudely limiting fees to an unrealistic 0.12/transaction, Congress is destroying the marketplace effects that drive innovation in the networks. Banks are justified in an equally crude reaction: you take away our ability to price a service realistically over here, so I guess we'd better raise another price over there.
First of all, it's the Federal Reserve, not congress, who is limiting transaction fees. Second of all, 12 cents is not an unreasonably low cost for a transaction. The payment networks cost virtually nothing to operate, and this becomes abundantly clear when you look at the profit margins of companies like Visa and MasterCard, which are higher than virtually any other company out there.
There is very little innovation in payment networks. There are established players -- Visa and MasterCard -- who charge merchants 1% or more of every purchase made. They pass along much of this money to banks, and payment networks essentially end up competing on how high their fees can possibly be so that banks choose their brand of card. And because the payment networks demand that merchants charge the same price for cash or card, retailers are forced to increase their prices for consumers who pay in cash.
If there were real competition, we would see payment networks competing to lower their fees. But you don't see that.
There is very little innovation in payment networks. There are established players -- Visa and MasterCard -- who charge merchants 1% or more of every purchase made. They pass along much of this money to banks, and payment networks essentially end up competing on how high their fees can possibly be so that banks choose their brand of card. And because the payment networks demand that merchants charge the same price for cash or card, retailers are forced to increase their prices for consumers who pay in cash.
If there were real competition, we would see payment networks competing to lower their fees. But you don't see that.
I stand corrected. The point of sale devices, the card association IT systems and networks, the bank IT and networks (a worldwide network that predated the 'net), the whole departments of people who support merchants, the fraud prevention measures, the training, the government and card association rules compliance--all integral parts of "the payment networks" are cost free. I should have reasoned backwards from a company's profit margins and realized that these infrastructure costs don't exist, and operating costs are an illusion. I should have also realized that the move into chip cards, the use of heavy-duty encryption, the rapid adoption of contactless payments products, the support for e-commerce in a world where identify verification can be a challenge, exposing the bank to untold risk, all are not innovations, they're just the cost-free hobbies of some rich bank persons.
Thank you for the enlightenment, you smecking genius.
I will now hang my head in shame for speaking out of turn after actually working on these systems for a quarter century and not realizing that it was so inexpensive.
Chase can kiss my credit cards good by if that's the case. I don't hold checking/savings accounts with Chase, but that doesn't mean I need to support this behavior via their credit cards. Citibank is on the edge of being booted as well for similar reasons. Hey banks, you are here to hold my money under FDIC protection, not find ways to chip away at it.
But, there's always been a fee for using the ATM of a bank you're not a member of.
Feels like FUD to me.
Feels like FUD to me.
Coming from a small European country, it's one of those things that you think it's really weird about countries like United States. Here you can withdraw money without paying anything from any ATM. I never even saw a ATM asking for a fee.
When I went to NYC it wasn't easy to find ATMs without fees (and then there was the problem of my card being part of the Maestro network which isn't available everywhere).
When I went to NYC it wasn't easy to find ATMs without fees (and then there was the problem of my card being part of the Maestro network which isn't available everywhere).
On the other hand, the few times I've been to the EU, it wasn't easy to find public restrooms without fees :) In the US, I've never seen a public restroom that charged.
(Actually I saw one, at a tourist destination in Martha's Vineyard, that had a suggested donation. I was flabbergasted.)
(Actually I saw one, at a tourist destination in Martha's Vineyard, that had a suggested donation. I was flabbergasted.)
That's very true! The trick is to enter a cafe and ask for a bottle of water while taking the chance to ask "oh, by the way, where's the restroom?"
Ah, similar to how one gets "free" WiFi in the States by ordering some coffee from a Starbucks :) I am touring Europe in a couple months and will keep this in mind, thanks!
I'd say it's the same logic but usually a bottle of water in Europe is much cheaper than any coffee from Starbucks. :)
That depends on the country. It used to be that in Germany you would pay a person whoes job it was to keep the toilets clean and nice.
I asked my friend, a native German, about that last summer when I was in Germany.
She said a lot of times that money does not even go to the person cleaning the toilets.
I did pay 1 euro to use a bathroom in a train station. It seemed to be similar to US truck stop bathroom/showers. As soon as I left they cleaned the bathroom.
She said a lot of times that money does not even go to the person cleaning the toilets.
I did pay 1 euro to use a bathroom in a train station. It seemed to be similar to US truck stop bathroom/showers. As soon as I left they cleaned the bathroom.
It is because <small European country> only has one bank? ;-)
In Spain these charges are quite common too, but are grouped into competing ATM networks: servired, telebanco and 4B being the main ones.
In Spain these charges are quite common too, but are grouped into competing ATM networks: servired, telebanco and 4B being the main ones.
Not really, I guess it really varies. I'm from the other side of the border, Portugal, the banks are pretty much the same as in Spain (well, they are almost all Spanish by now).
In my small European country (Romania) fees at other bank's ATMs came with the ATMs 20 years ago. I guess it varies.
Sure, but $5 is more than double the standard fee in my experience.
I think the significance lies not in "oh no, it costs more now!" but in the fact that banks are beginning to add more and more fees to make a profit - doesn't this suggest they're hurting elsewhere, and are turning to what could be considered some pretty desperate measures to come up with money?
I think the significance lies not in "oh no, it costs more now!" but in the fact that banks are beginning to add more and more fees to make a profit - doesn't this suggest they're hurting elsewhere, and are turning to what could be considered some pretty desperate measures to come up with money?
Not necessarily, a corporation always is looking for ways to grow its profits, preferably through easier methods, rather than more difficult methods. That doesn't mean they're necessarily hurting in other revenue streams.
I met someone who once worked for Proctor & Gamble in marketing. He told a story of how they had a goal to increase a certain fabric softener's revenue by a million dollars in 1 year for a certain market. They looked at the stats and discovered that a certain percentage of customers always came back to purchase due to brand loyalty.
Then they did some more research and redesigned the fabric softener bottle's cap and spout. You normally pour the fabric softener into the cap, and then into the laundry machine, right? So they made 2 changes. First, they made the cap a touch wider and the line a bit higher. This way, customers thought they strangely weren't putting in as much fabric softener as normal, so they would pour in more. Second, they made the spout easy to overdose fabric softener accidentally. In market tests, customer test groups said that the spout made it so much easier to pour. So they released the product and marketed it as having the new easy-pour spout. It guaranteed faster usage, and therefore faster repurchase rates from loyal customers. Bam. They made their numbers and increased the stock price that little bit more.
I met someone who once worked for Proctor & Gamble in marketing. He told a story of how they had a goal to increase a certain fabric softener's revenue by a million dollars in 1 year for a certain market. They looked at the stats and discovered that a certain percentage of customers always came back to purchase due to brand loyalty.
Then they did some more research and redesigned the fabric softener bottle's cap and spout. You normally pour the fabric softener into the cap, and then into the laundry machine, right? So they made 2 changes. First, they made the cap a touch wider and the line a bit higher. This way, customers thought they strangely weren't putting in as much fabric softener as normal, so they would pour in more. Second, they made the spout easy to overdose fabric softener accidentally. In market tests, customer test groups said that the spout made it so much easier to pour. So they released the product and marketed it as having the new easy-pour spout. It guaranteed faster usage, and therefore faster repurchase rates from loyal customers. Bam. They made their numbers and increased the stock price that little bit more.
Raising the ATM fees seems like a terrible way to raise money, from a marketing perspective. The softener example made customers happier with their selected brand; this seems like it would anger customers.
As another anecdote, last night I almost didn't withdraw cash because the fee was $2, instead of $1.50. If it were $5, I definitely would have walked the two and a half blocks to my "home" ATM.
As another anecdote, last night I almost didn't withdraw cash because the fee was $2, instead of $1.50. If it were $5, I definitely would have walked the two and a half blocks to my "home" ATM.
The article suggests that they're pissed off that congress is considering limiting their overage fees (which IMO are purely predatory/opportunistic, no way an overage actually costs the bank 150 bucks, I could be wrong though).
So they're retaliating by saying "yeah, well we're just gonna stick it to you another way, then". Emotionally-driven economics at work.
I mean, it's not like they could actually make the system more efficient. Less people to manage, harder to justify your big paycheck for managing a simple and efficient system.
So they're retaliating by saying "yeah, well we're just gonna stick it to you another way, then". Emotionally-driven economics at work.
I mean, it's not like they could actually make the system more efficient. Less people to manage, harder to justify your big paycheck for managing a simple and efficient system.
I'd recommend switching to a bank account that refunds ATM withdrawals at other bank ATMs. My bank - Ally Bank - has free ATM withdrawals at any ATM. This easily saves me $20 a month in time and money.
I fully agree. Not only does Ally refund ATM withdrawals at banks in the US, but also at banks overseas.
While slightly annoying to make deposits, it is worth it to not pay fees and to be able to get money anywhere. And like most banks now, they offer easy online bill pay for free.
While slightly annoying to make deposits, it is worth it to not pay fees and to be able to get money anywhere. And like most banks now, they offer easy online bill pay for free.
Disagree about deposits actually - for me anyway it's way easier to put things in my mailbox than to drive to the bank.
I can never figure out why people complain about ATM fees. Especially when those same people proceed to take $20 out of an ATM, thus maximizing the fee ($5/$25 = 20%!)
The math is not particularly difficult: Always take out the absolute maximum that the machine will give you. $5/$505 =~ 1%. That's close enough to zero to ignore. Feel free to stash most of that cash in your sock drawer if you don't want to carry it around.
The math is not particularly difficult: Always take out the absolute maximum that the machine will give you. $5/$505 =~ 1%. That's close enough to zero to ignore. Feel free to stash most of that cash in your sock drawer if you don't want to carry it around.
... Most people who complain about said fees don't have the sort of funds to do that. Not to mention not wanting to walk around with $500 (which you will have to do unless the ATM happens to be in your sock drawer already).
OK, I'll grant you a window from birth up to two months after graduating from college (I too remember transferring my last $10 from savings to checking so that there would be a full $20 to withdraw). After that, you have no excuse not to be able to pull $500 from a cash machine every couple months.
Remember, once it's out you don't have to spend it all that day. I tend to pull cash out maybe once every month or so, depending on how much I go out. It's really just life skills we're talking about. ATMs only enter the discussion as a symptom.
Remember, once it's out you don't have to spend it all that day. I tend to pull cash out maybe once every month or so, depending on how much I go out. It's really just life skills we're talking about. ATMs only enter the discussion as a symptom.
Besides the fact a lot of people have much less money than you, I think you also use ATMs much differently. If you're not traveling the world, the primary use of ATMs is getting cash when you need it, not getting out a large bulk sum a few times a year which is then hidden and dolled out incrementally for times you think you might need cash ahead of time. That can easily be done at the bank when cashing those huge checks everyone apparently starts getting after college.
That's the life skills I talked about above.
- If you have a job and ever get to the point where you have only $500 in savings, that is a huge red flag that you're doing something wrong. You should immediately stop buying things and budget your income so that you're saving a few hundred dollars a month, and endeavor never to get below a certain comfortable pad. If you're in IT, you can easily get a $10k pad in place within one year of having your first job. Once that's in place, then you can think about owning a television and other consumables. Not before.
- If you regularly find yourself with no money in your wallet, that's a symptom that you're not thinking ahead. I tend to keep between $50 and $200 in my wallet. If I buy something and notice that I've only got a couple 20's in there, I'll make a note to either stock up from the sock drawer or hit an ATM when I get a chance. ATMs are a way to get money out of the bank. It's best not to think of them as a replacement for your wallet (since that's the way to maximize your fees).
You don't have to have lots of money to do these basic things. I was doing them when I made $34k/year.
- If you have a job and ever get to the point where you have only $500 in savings, that is a huge red flag that you're doing something wrong. You should immediately stop buying things and budget your income so that you're saving a few hundred dollars a month, and endeavor never to get below a certain comfortable pad. If you're in IT, you can easily get a $10k pad in place within one year of having your first job. Once that's in place, then you can think about owning a television and other consumables. Not before.
- If you regularly find yourself with no money in your wallet, that's a symptom that you're not thinking ahead. I tend to keep between $50 and $200 in my wallet. If I buy something and notice that I've only got a couple 20's in there, I'll make a note to either stock up from the sock drawer or hit an ATM when I get a chance. ATMs are a way to get money out of the bank. It's best not to think of them as a replacement for your wallet (since that's the way to maximize your fees).
You don't have to have lots of money to do these basic things. I was doing them when I made $34k/year.
Saw this announced on network news. The anchorlady said a $5 fee on a $100 withdrawal was like a 10% tax…
Aside from the obvious arithmetic error, they are not the same at all. Tax revenues are spent on public works and societal benefits, whereas bank fees are kept by the bank.
Maybe that's why she doubled it.
I can't tell if the article is talking about ATM fees for using an unaffiliated ATM or if Wells Fargo is going to start charging people for using Wells Fargo ATMs. The wsj links to another article that has one of those obnoxious "click to continue reading" banners, which is where I stopped. Does anyone know what this is actually talking about?
As a member of a bank who gives me my ATM fees back, I say bring it on.
I see the benefit of belonging to such a bank, but if other banks “bring it” might it become too costly for your bank to keep paying your fees for you?
Hope the banks push it too far and create a financial incentive for new players in the finance industry.
If you don't want to pay 5 for the fee, don't use the machine. It really is that simple. The owner of the ATM has the right to charge whatever the hell they want, it is their property, they have to service the machine why shouldn't they get to pick how much to charge?