Should ATM Fees Be Capped at 50¢?

You need cash, and you’re not anywhere near one of your bank’s ATMs. So what do you do? Most likely, suck it up and accept the fee assessed for getting cash from a unaffiliated ATM. The average fee seems to be $3 nowadays, though it can run you $5 in some casinos or airports. And what does the transaction actually cost the banks involved? All of 36¢.

Sen. Tom Harkin wants to stop the ATM fees cash grab. He just introduced an amendment that would cap withdrawal fees at 50¢ per transaction, reports the WSJ :

“The cost of fees that consumers pay has skyrocketed,” he said in a speech on the Senate floor.

Banks charge an average of $2.66 each time a consumer uses an ATM to withdraw cash, according to the Federal Reserve…

“It’s unfair for people to pay that much to access their own cash,” Mr. Harkin said.

Unsurprisingly, the National Association of Federal Credit Unions opposes the amendment, and disputes the 36¢ figure cited by Harkin:

NAFCU President Fred Becker told Senate leaders this may cover the cost of processing an ATM transaction, but it doesn’t reflect additional costs associated with maintaining ATMs or protecting members and customers, and their money. This fixed, 50-cent cap “could ultimately force many financial institutions, including credit unions, to close” their ATMs.

Somehow, I doubt that. Seems like technology will continually bring down the cost of using an ATM, though the markup isn’t nearly as bad a rip-off as a 20¢ text message. Besides, in any remotely populated area, it seems like there’s an ATM in every third storefront. They wouldn’t be there in such quantity unless they were big money makers, and it wouldn’t be the worst thing if some of them disappeared.

On the other hand, part of me thinks the marketplace should dictate what kind of fees can be gotten at an ATM. For the most part, this is an entirely avoidable fee. With a little planning, occasional slight inconvenience, strategic use of credit or debit cards in stores, or simply by choosing a bank that reimburses you for ATM charges, you’ll never have to pay a fee for accessing your money.

Life’s Little Rip-offs That Drive Consumers Totally Nuts

cchops

Is this a trick question? YES!!!
fw1421

We must remember that the banking business is a “FOR PROFIT” business and not in the business of just covering their costs. The bigger the profit the better so that their executives can receive bigger and bigger bonuses. The customers be damned.
katiestamos

Thank you for shining a light on this issue. This is a reasonable solution that would enable banks to cover operating costs and even make a profit – but prevent exorbitant fees. I hope this catches on! Katie Stamos
bobschwartznj

I think “plan A” should be to let the competitive market drive the fees to a reasonable level, but in this case it clearly hasn’t happened. So it is time for plan B.

In his spoof book “Why Not Me?” Al Franken ran for the presidency on the platform of eliminating ATM fees. I hope Tom Harkin has better luck.
bluesun68

I own one of these machines. 3k. It needs it’s own phone line, $50 a month. I spend about an hour a day to count cash out and fill the machine. Say 15 an hour times 30 days, 450 dollars a month. Plus I have to have 4k sitting there all the time. I charge $2 a transaction. This revenue is about 800 a month. So I’m making a whopping 300 or so every month. Woo Hoo. If I could get rid of it I would. Everyone who thinks it’s a great idea for price controls needs to think about where they would be if the government cut the price on whatever their company sells. If you cut the fee, you cut the number of machines. Then you won’t have the choice of paying the fee or not, you’ll just be stuck.
slick84

Yes please. I’ve been ripped off enough from these banks charging anywhere between 2 bucks to 4 bucks per transaction!

Limit them to rip the consumer off. Arent those big cats making enough money from as it is?!

I would love to see this amendment go live ASAP!
therantguy2010

Your math is really fuzzy (and way wrong)

Year one costs are $3600 (Machine + phone).
Year one revenue is $9600 (800 monthly)

So after the first year you net $6000 and have paid for the machine in full.

At 1 hour per day (250 business days) you are paying yourself $24/hr to keep the machine full.

In year two, you’d be paying yourself $36/hr to keep the machine full.

The idea that a cash machine is some sort of burden for you is laughably absurd.
seanh352

The fact of the matter is that this question shouldn’t even be asked!! People pay ATM fees because it’s easy. I have yet to see a banker hold a gun to someones head, forcing them to pay a fee, ever. I probably pay about $20.00 a year in atm fees. I pay them because I’m either lazy, or driving to my atm is more expensive, and I didn’t plan ahead. That is not the banks fault. Let them charge whatever they want. I usually don’t use them anyway, because they ARE expensive, and I’m smart enough to avoid them most of the time.
http://ligb.wordpress.com doraflood

I hate paying those fees — BUT, the bank is a business and we want to keep them out of bankruptcy. It’s always FREE to access the bank’s own ATMs. Avoid fees by moving your cash to a bank that ATMs near where you live. Carry enough cash — and have some spare. Most fees are levied on those small withdraws — $20 & $40.

However, I think banks do need to limit or remove fees on two types of withdraws: Senior citizens who access ATMS for pensions and social security funds and welfare/low-income who access ATMs to receive indigent benefits.

For the rest of us: it’s usually a choice we make somewhere down the road. And ATM owners and banks, like most businesses, have found a way to make money on that choice.
bluesun68

The math is not fuzzy or incorrect. 30 days in the month times 1 hour times 15 an hour= 450. Plus 50 for the phone. This is 500 a month in cost. Revenue of 800. Profit of 300 a month. Or 10 a day. Plus most people who use it do not shop in the store. So I have to invest 1 hour a day (15) to make 10 dollars a day.
huntersdad

I work for the country’s largest wholesale distributor of retail ATM’s. We sell the ATM’s, parts, and supplies to customers across the country. I work with thousands of the customers who own the ATM’s. If you go to an ATM and it’s charging you $2.00, the operator of that machine is not making $2.00. Far from it. The Senator has failed to realize all that goes into making the ATM work. There is the initial cost of the ATM, plus the monthly costs of maintaining the ATM itself. If a part goes bad, you can either replace it or have it repaired, neither being a very inexpensive option.

If our governement is seriously considering passing this, what’s next? Are they going to tell auto makers that they must sell cars for $2000. Aren’t auto makers making too much money? What about if you work for Starbucks? What are they going to say about Starbucks overcharging you for a cup of coffee. They should only sell you coffee for .75 cents. This has to stop, and if it goes through, there are going to be thousands of people without jobs. I thought this administration was concerned about growing jobs.
davetoomey

Of course your math is wrong. Unless you are replacing the machine every year, that $3K (minus whatever maintenance is required) is pure profit after year 1.
davetoomey

Given your job, hardly an unbiased opinion. No, don’t stop ripping off people, I make my money from that!