Chase Bank can’t seem to stay out of the news. Last week, I mentioned that the bank was considering limiting debit card transactions to $50 or $100 as a protest against the industry’s regulation of interchange (swipe) fees. Today, there is news that the bank has increased the ATM fee for non-customers to $5 in Illinois and $4 in Texas.
This is a trial; while they likely won’t roll back these increases without major protest, this will serve as a test for increased ATM fees nationwide. Complaints about this increased fee will go nowhere. From the bank’s point of view, it’s easy to avoid this fee: become a Chase customer. The bank’s own customers can access ATMs for free.
As Chase’s fee increase is found to be successful, as it undoubtedly will be, other banks will follow suit. Some of the more customer-friendly banking institutions like online banks and credit unions are willing to reimburse their own customers for fees they pay to use other bank’s ATMs. But as fees increase, so does the cost to these smaller, friendlier banks. They may be less willing to reimburse these fees in the future.
Being a banking customer with just a basic checking and savings account, something that has been free or nearly so, is becoming increasingly expensive. Today, we already have a portion of the population that prefers to avoid banks, either because they don’t have money (that is, they live paycheck-to-paycheck), they can’t afford bank fees, or they won’t be approved for an account, according to The Impact of Banking and Fringe Banking Regulation on the Number of Unbanked Americans, a Yale University study. This “unbanked” population is served by check cashing facilities, where customers may not need to pay fees to have their checks cashed.
Increasing the cost of traditional banking, in addition to the recent trend of traditional bank branches abandoning poor communities, will continue to broaden the divide between low-income and moderate-income households.
Yale University [pdf], World Bank [pdf]
Published or updated March 17, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
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{ 17 comments… read them below or add one }
“This “unbanked” population is served by check cashing facilities, where customers may not need to pay fees to have their checks cashed.”
I thought the whole controversy was that check cashing facilities charged too many fees.
Some do, and apparently some don’t. I haven’t been in any to take a look myself. The predatory fees are generally found for payday loans… and check cashers could offer payday loan services, as well.
No matter what regulations are put in place, banks will find another way to make the big bucks and give the big bonuses. Shame on us if we let them take advantage of us. Just say “no.”
We all know who we should not do our banking business with.
Wow… that is steep. After getting nailed with ATM fees (both from the ATM machine for not being their bank’s customer and from my bank for not using my bank’s ATM), I have decided it’s time to rethink my zero-cash ways. Now I try to have $5-$10 on me at all times.
I guess they lost some fees so they’re always looking for more.
BOYCOTT JP MORGAN CHASE BANK – IT’S THE WAY!
Yikes! $5?!? That seems steep.
I did a column for MSN Money about how to get into a bank or credit union even if you’ve had problems in the past (e.g., bounced checks or overdrafts). While researching it I found that an estimated 9 million people in this country are unbanked. Scary.
If it’s kosher to post links, here goes:
http://articles.moneycentral.msn.com/Banking/BetterBanking/think-a-bank-will-not-take-you-what-now.aspx
it is hard for me to imagine being “unbanked” in this day and age. that said, i don’t even know if i think 9 million is too low or too high. i just know that it would require major changes in my life to be unbanked. i do not even know if it could be done.
Why am I not surprised??? I agree with the poster who said “boycott Chase bank!” – I do everything possible to avoid paying ATM fees and already avoid their ATMs like the plague anyway.
Well chase is a bunch of crooks as all the major banksters have been. Why anyone is stupid enough to use a major bank after they stole trillions of dollars is beyond me. All I can say is you get what you deserve. Continuing to support criminal activity will only cause more criminal activity. So all you morons complaining about ATM fees just remember you asked for it.
Simple solution, only use the ATM at your own bank.
while i agree it is quite steep, i do not feel overly outraged by this. i mean, i realize it probably costs them nearly nothing when people use non-bank atms, but, at least from my standpoint, these fees are avoidable. i nearly never use cash, and when i do, i make sure to use my atm.
Maybe I’m missing something here, but what’s the problem with Chase charging non-customers to user their ATM network? It’s their network and it’s not like there isn’t any competition. Don’t like Chase? Get an account with BOA or Wells Fargo or one of the other nation-wide banks. I’ve been using Wachovia for years and I have never once paid an ATM fee while travelling in the US. Not a single time. It used to be that you didn’t have to pay a fee for foreign ATM transactions either, but unfortunately that has changed.
The bottom line is that if you have to pay these fees it’s probably due to poor planning on your part. Don’t begrudge the banks their profits.
Good planning – go to your bank and use their ATM – or use your debit card and get a cash advance inside the bank – I have done this for years, with no fee. There would have to be a huge emergency for me to pay $5 to get my own money – that I am making very very very little interest on to begin with.
I’m still not sure as to why people would pay that. I’ve always planned around the ATMs that I’ve needed and now that I’ve switched banks, I don’t have to go 20 minutes out of my way. And Chase did charge a nice little out of network fee every time I did use some other banks ATM. Now I’ve left and they don’t get my money any more.
I can’t say I am too surprised. Banks will always find a way to increase their profits at the expense of their customers!