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]