What a racket: Big banks rack up $6.4 billion in ATM and overdraft fees
From CNN Money:
If you’ve ever had to pay $3 (or more) to get your own money out of an ATM machine, you aren’t alone.
Nobody likes those fees. Except banks.
America’s three biggest banks — JPMorgan Chase (JPM), Bank of America (BAC) and Wells Fargo (WFC) — earned more than $6.4 billion last year from ATM and overdraft fees, according to an analysis by CNN Money that was verified by S&P Global Market Intelligence.
That works out to over $25 in fees annually for every adult American.
Despite public outcry, banks show no sign of scaling back on fees. The big three banks collected nearly $300 million more in ATM and overdraft fees in 2016 than they did in 2015.
At JPMorgan alone, ATM fee revenue jumped a whopping 22% last year. A JPMorgan spokesman told CNN Money that’s because the bank raised ATM fees by 50 cents at the end of 2015. Customers must pay the fee whenever they use a non-JPMorgan Chase ATM machine.
The Consumer Financial Protection Bureau and other watchdog groups have tried to warn people: Beware of bank fees.
“These fees have a disproportionate impact on low and moderate income families living paycheck to paycheck,” says Pamela Banks, senior policy counsel at Consumers Union, an advocacy group.
The average fee for using an “out-of-network” ATM in the United States is now $4.57, according to Bankrate. Last year marked the tenth straight year of increases.
Overdraft fees are even more profitable than ATM fees
Senator Bernie Sanders actually made ATM fees an issue during the presidential election last year. He vowed to limit ATM fees to a maximum of $2.
“It is unacceptable that Americans are paying a $4 or $5 fee each time they go to the ATM,” Sanders said.
While Sanders zeroed in ATM fees, banks make more money by charging customers so-called “maintenance” and overdraft fees. Maintenance fees are a monthly charge just to keep an account open. Some banks assess customers a few dollars a month if their account balance falls below a certain level, such as $5,000.
Overdraft fees occur when a person’s bank balance falls below $0 and they still take money out at an ATM or use their debit card to buy something. The bank is essentially giving people a loan, but the fees are hefty: Many banks charge $35 every time this happens.
That adds up to big profits for the banks. JPMorgan made close to $2 billion from overdraft charges last year. Wells Fargo made $1.8 billion, and Bank of America made $1.7 billion on overdraft fees.
Customers aren’t supposed to even be able to overdraft on their account unless they actively “opt in” to the service. But a 2014 Pew study found more than half of the people who overdrew their checking accounts in the past year didn’t remember consenting to the overdraft service.