April 29 2011|05.00 AM UTC

Samantha Eckles

Will ATM Fees Lead to Fewer Transactions?

Category: Personal Finance, SRTags: , ,


How much are you willing to pay for the convenience of using an ATM outside of your bank’s network? Two dollars? $2.50? Four dollars? How about five bucks? Would you spend as much as five dollars for that convenience?

Feed me, Seymour!

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Unfortunately, ATM users will soon have to decide whether it’s worth it since JPMorgan Chase is currently running market tests to determine whether they can push consumers to the five dollar mark.

In Illinois, the bank’s ATMs now charge non-members $5.00 for usage. The other beta market, Texas, has caught a little break – the ATMs only charge $4.00. In the rest of the country, JPMorgan Chase ATMs charge $3.00 per transaction.

Maybe No One Cares Much

Will there be any backlash for Chase Bank? Or, will we find that Americans will choose convenience over a fee of a few bucks? If past behavior is any indication, many bank customers said that they would leave large banking institutions in favor of small credit unions after the TARP bailout, but we have yet to see that exodus.

If the average consumer forgot about a $25 billion bailout that quickly, then maybe they’ll get over a five-buck charge even faster. Is the frustration of a five dollar charge enough to outweigh the desire for convenience?

Additionally, BillShrink recently polled our Facebook users (www.facebook.com/billshrink) to ask what was more important in a bank: ATM access or ease of online banking? Only 15% said that ATM access was most important in selecting a bank.

Or, Will Higher Fees Push Consumers Away From ATM Withdrawals?

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No matter where they live, a lot of people think this is way too much for a single transaction. When interviewed about the fee hike by RockvilleCentrePatch, people responded with shock or anger. Nearly all of them said that these high charges will make them consider ways to avoid ATM transactions. Instead of paying rising ATM fees, individuals could choose to:

  • Use cash-back options at stores that don’t charge fees. Many in-store ATMs are attracting customers by waiving fees
  • Plan ahead and go to your own bank’s ATMs for cash withdrawals. Avoid those last-minute visits to non-bank ATMs
  • Find ATMs that charge smaller fees

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There are plenty of alternatives available. Sometimes it is as simple as walking a block or two to avoid the higher fees. And for those of us who used to be reimbursed by our bank for out-of-network fees, now is a good time to double check if you will still receive this benefit.

PNC, for instance, has announced that it will stop reimbursing ATM fees later this year. Currently, PNC refunds fees for members with more than $2,000 in their checking accounts. That perk, however, will soon come to a close in an effort to keep PNC’s checking account services free for its members.

At our recent check, there were still a few banks out there that will reimburse you like Fidelity Investments, Schwab and First Republic, to name a few.

The truth is, it’s unclear how much consumers are willing to pay for this convenience and banks are going to continue to push this boundary until they find out. How much would you pay for cash if you were in a pinch? I once paid $10 in Vegas at a Casino because I just had to get in on that late-night poker game. Have any outrageous ATM fee stories to share?

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{ 1 comment… read it below or add one }

Bob at Trading Strategies May 2, 2011 at 10:34 pm

$2.50 is the most I’ve ever paid. I sometimes see higher fees, but this seems outrageous, and I go elsewhere. ATMs are a great convenience, but they also let banks slash their labor costs. I remember when most banks had many tellers and long lines waiting for them. Banks and consumers have both benefited from ATMs. Still, banks will charge what the market will bear.

I think the key should be what percent of the withdrawal goes for fees. A $2 fee is 2% of $100, but 10% of $20. It would be fair to charge $20 for a $1000 withdrawal, and 40 cents for a $20 withdrawal – 2% in both cases. I expect it would be easy to program ATMs to charge a constant percent rather than a constant dollar amount. That would stop penalizing small withdrawals and those with lower incomes. Legislation should set a ceiling on fee percentage, just as it does on loan interest.

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