1. Monday, May 10, 2010 - 6:49 PM
I think ATM fees aren't the issue, its only an issue where your bank punishes you for using a foreign ATM.
Example, you can't find a BofA ATM, so you use a Chase ATM, you eat the $3 fee what can you do, but you hate that BofA charges you a $2 fee on top of that for using a Chase ATM.
2,281 posts since
May 9, 2010
Rep Points: 3,786
2. Tuesday, May 11, 2010 - 10:17 AM
I have found fees for using an ATM quite undefendable ever since they were allowed to be started under Reagan -- they have amounted to nothing more than paying TWICE for the service, and a very exhorbitant fee -- a mafia level fee -- at that. Federal law did and still does require that when you use your ATM card at a "foreign" bank, your bank must pay that bank 50¢ for the transaction. And that 50¢ was determined on the basis that it only cost the "foreign" bank 25¢ to do that transaction, meaning the "foreign" bank got a 100% profit -- way more than enough. This arrangement and ban on surcharges was so that an insurmountable competitive advantage would not be held by the big banks (whose many branches served to provide ATM machines all over), effectively undermining new, smaller banks ability to compete -- effectively, an antitrust consideration intended to provide for banking competition.
But then under Reagan -- and I don't want to start any partisan politics, but the policy came from where it came -- the normal din obscured the facts and, at the behest of the big banks, Congress deregulated the ATM machines, allowing the banks to make any amount of charge they chose to -- while still getting that 50¢ from the ATM cardholder's bank. That is, the "foreign" bank was getting paid twice for the transaction, and the ATM fees imposed by the bank were adding on in the $2 range for something determined to cost them 25¢! The price was intended to make you drop your smaller bank and go to something like Bank of America so you could use the ATM free.
This, of course, completely favored the big banks at the expense of the smaller banks, undermining smaller banks ability to compete or even to grow. Bank of America was the first to add the fee, almost immediately -- with its many branches and so an extensive ATM availability. This was designed so people would decide they could no longer consider banking at the smaller banks, would have to resort to the bigger banks just so they would not be bled by unjustified ATM fees since their bank might only have a couple locations that might not be very convenient.
I've always considered these surcharges being allowed to be very anti-competition and very bad for we savers.
I'm glad to see someone at least trying to reel the fees in, but to still allow surcharges is really wrong as anti-competitive and anti-consumer. The old system was the right system -- gave very good compensation to the ATM provider. Let the ATM provider have the 50¢, but from the user's bank. Then allow the user's bank to decide whether they want to pass it along with a fee per transaction to the cardholder. (Most smaller banks would not pass it along for fear people would not bank with them if they did.) That way, the consumer can have much more competition in banking choices, something the free market is supposed to be seeking.
343 posts since
Jan 16, 2010
Rep Points: 2,357