New ATM Fees at Chase and PNC - How It May Affect Your Interest Rates

More large banks are adding new ATM fees. In February I reported on TD Bank's new ATM fees. News reports came out in early March on PNC Bank's new ATM fee policies that will take effect later this year on its free checking accounts. PNC will no longer reimburse free checking account customers who use ATMs of other banks. And yesterday, the Wall Street Journal reported on Chase Bank testing new higher ATM fees in Texas and Illinois for non-customers who use Chase ATMs.

Update 5/3/2011: It has been reported that Chase is ending the higher ATM fees for non-customers in Texas and Illinois.

Banks' Excuses for Higher Fees

As the WSJ article described, banks are trying to replace revenue that's expected to be lost from last year's overdraft regulation. They are also adding fees in preparation of the new debit card regulation that's scheduled to take effect in July. That regulation would lower the fees that banks charge merchants for processing debit card transactions. However, justifying new fees due to the debit card regulation is premature. The New York Times reported that a bipartisan group of 9 senators introduced a bill on Tuesday that would delay that new regulation by two years to allow for a study to be done.

PNC Bank ATM Fee Changes

PNC Bank currently offers reimbursement of non-PNC Bank ATM fees with a $2,000 minimum average monthly balance. According to the Pittsburgh Post-Gazette article, free checking account customers will have to start paying if they want to use another bank's ATMs. Changes take effect on March 27 for new customers and September 12 for existing customers.

Chase Bank ATM Fee Changes

The new ATM fees at Chase will only affect non-customers. Instead of paying $3 for withdrawing money at Chase ATMs, non-customers will pay $5 in Illinois and $4 in Texas during this testing phase according to the WSJ article.

Higher Costs for Banks That Reimburse ATM Fees

These higher fees may affect banks which reimburse their customers when they use other banks' ATMs. That reimbursement is becoming more costly, and the more banks pay for ATM fee reimbursements, the less they will pay out in interest.

Some of the popular internet banks that have generous ATM fee reimbursement policies include Ally Bank, Incredible Bank, USAA Bank and Charles Schwab Bank.

In addition to internet banks, ATM fee reimbursements are popular for reward checking accounts. Some banks provide unlimited ATM fee reimbursements if you meet the monthly reward checking requirements. With banks like Chase increasing fees, this unlimited reimbursement policy will become more costly. It will have less effect on banks that limit their reimbursements. For example, Coulee Bank currently limits ATM fee reimbursements to $20 a month.

If your main concern is interest rate, banks that offer unlimited ATM fee reimbursements may not be the best choice in the long term.