A few years ago I switched from Wachovia to TD Bank. Wachovia, which already charged a fee for using non-Wachovia ATMs, had added another fee for using a teller more than three times a month. Argh.
TD Bank had neither fee as well as more consumer-friendly hours. Since then I have been happily stopping at the Wawa, getting a little gas, a cup of coffee and some quick cash.
Then last week TD started charging $2 for Wawa (or any other non-TD) ATM withdrawals. I was crestfallen.
“I am crestfallen!” I said to my favorite TD banker. “Why would they do that?” She was empathetic (if not crestfallen) and noted that Citibank and Chase were going to charge $5 for the same thing. Ouch!
I asked my favorite source – the Internet – why. It answered, “Someone has been squeezing the banks’ balloons.”
In an attempt to prevent another financial crisis, Congress passed the Dodd-Frank Bill last year. It has a slew of new regulations, many of which the big banks neutered fairly quickly with their lobbyists. What they didn’t see coming was an amendment by Dick Durbin (Dem., Ill.) that caps fees banks can charge retailers for debit- or credit-card transactions.
It all started with ATMs, which were designed to save personnel costs: $15,000 a year to maintain an ATM is a lot less than a teller (thus Wachovia’s “three visits a month” rule).
Then banks realized ATMs could produce profits as well as savings.
In 1998 the average fee for using a “foreign” ATM was $1.37: 27 cents for the Cirrus or Star operators, 60 cents for the ATM owners (independent owner – in malls, on the street, etc...), and 50 cents was kept by the bank.
Banks took in $2.1 billion in ATM fees that way in 1999. And profits ballooned from there.
Surcharges that averaged 89 cents in 1998 were $2.33 last year; fees totaled $7.1 billion. Of that, $3 billion was collected by banks just from customers using other ATMs.
But if you think ATMs are big business, check out “swipe fees.”
A “swipe fee” is charged to the retailer for every use of a credit or debit card. It is paid to Visa or MasterCard, a duopoly that operates as a monopoly that is owned by 46,000 financial institutions. Debit cards, originally designed to reduce costs for processing checks (remember those?), now earn banks an average 44 cents per swipe. “Swipe fees” brought banks $20.5 billion last year, according to the New York Times.
Retailers raised prices to pay for “swipe fees.” That bothered consumers so retailers lobbied Congress to rein in the banks.
Enter Sen. Dick Durbin with an amendment to the Dodd-Frank Bill that limits “swipe fees” to 12 cents per swipe, starting April 21.
Retailers are ecstatic; Home Depot figures Durbin’s amendment will save them $35 million per year.
Banks are ballistic. How do they keep their $20.5 billion a year? Raise fees for ATM and other services. Some are even threatening to stop issuing cards altogether, claiming in advertisements that “Bureaucrats want to take away your debit card!”
See what I mean about squeezing the banks’ balloons?
What to do? Well, not much, as usual. But I found alternatives to ATM fees. One is small banks or savings and loans, which are more consumer-conscientious than big banks. Citadel, for example, doesn’t charge for using Wawa ATMs. It has fewer branches but Wawa has 450 stores. That’s pretty good.
A second is Internet banks. ING offers free ATM usage everywhere. But it’s completely electronic, so no checks, no branches, no tellers.
Third, we can just go back to checks and really squeeze their balloons.
Henry Briggs writes a regular column for Main Line Media News.
TD Bank had neither fee as well as more consumer-friendly hours. Since then I have been happily stopping at the Wawa, getting a little gas, a cup of coffee and some quick cash.
Then last week TD started charging $2 for Wawa (or any other non-TD) ATM withdrawals. I was crestfallen.
“I am crestfallen!” I said to my favorite TD banker. “Why would they do that?” She was empathetic (if not crestfallen) and noted that Citibank and Chase were going to charge $5 for the same thing. Ouch!
I asked my favorite source – the Internet – why. It answered, “Someone has been squeezing the banks’ balloons.”
In an attempt to prevent another financial crisis, Congress passed the Dodd-Frank Bill last year. It has a slew of new regulations, many of which the big banks neutered fairly quickly with their lobbyists. What they didn’t see coming was an amendment by Dick Durbin (Dem., Ill.) that caps fees banks can charge retailers for debit- or credit-card transactions.
It all started with ATMs, which were designed to save personnel costs: $15,000 a year to maintain an ATM is a lot less than a teller (thus Wachovia’s “three visits a month” rule).
Then banks realized ATMs could produce profits as well as savings.
In 1998 the average fee for using a “foreign” ATM was $1.37: 27 cents for the Cirrus or Star operators, 60 cents for the ATM owners (independent owner – in malls, on the street, etc...), and 50 cents was kept by the bank.
Banks took in $2.1 billion in ATM fees that way in 1999. And profits ballooned from there.
Surcharges that averaged 89 cents in 1998 were $2.33 last year; fees totaled $7.1 billion. Of that, $3 billion was collected by banks just from customers using other ATMs.
But if you think ATMs are big business, check out “swipe fees.”
A “swipe fee” is charged to the retailer for every use of a credit or debit card. It is paid to Visa or MasterCard, a duopoly that operates as a monopoly that is owned by 46,000 financial institutions. Debit cards, originally designed to reduce costs for processing checks (remember those?), now earn banks an average 44 cents per swipe. “Swipe fees” brought banks $20.5 billion last year, according to the New York Times.
Retailers raised prices to pay for “swipe fees.” That bothered consumers so retailers lobbied Congress to rein in the banks.
Enter Sen. Dick Durbin with an amendment to the Dodd-Frank Bill that limits “swipe fees” to 12 cents per swipe, starting April 21.
Retailers are ecstatic; Home Depot figures Durbin’s amendment will save them $35 million per year.
Banks are ballistic. How do they keep their $20.5 billion a year? Raise fees for ATM and other services. Some are even threatening to stop issuing cards altogether, claiming in advertisements that “Bureaucrats want to take away your debit card!”
See what I mean about squeezing the banks’ balloons?
What to do? Well, not much, as usual. But I found alternatives to ATM fees. One is small banks or savings and loans, which are more consumer-conscientious than big banks. Citadel, for example, doesn’t charge for using Wawa ATMs. It has fewer branches but Wawa has 450 stores. That’s pretty good.
A second is Internet banks. ING offers free ATM usage everywhere. But it’s completely electronic, so no checks, no branches, no tellers.
Third, we can just go back to checks and really squeeze their balloons.
Henry Briggs writes a regular column for Main Line Media News.