By Wael Abdelgawad | HeadlineFinancial.com
Bankrate.com reports that banks are raising ATM fees to record high levels, and eliminating free checking accounts.
In 2012 ATM surcharges went up for the fourth year in a row, to a new high of %2.50. The average fee for using an ATM from a bank other than your own increased 11% to $1.57. So using an ATM from a competing bank could now cost you $4.07.
That’s outrageous, especially in a time when many Americans are struggling financially.
In the past, banks always allowed you to use your own bank’s ATM machines for free, and have added surcharges only when you used a competitor’s ATM. But apparently customers are getting more savvy about using only their own ATM network; so banks are making up for the lost revenue by tacking on larger fees.
No more free lunch – err, I mean checking account
While ATM fees are going up, free checking is gradually being eliminated by banks. According to Bankrate, 39% of non-interest checking accounts in the U.S. are free of charge to all customers. That may not sound too bad, but last year it was 45%, and in 2009 it was 76% in 2009.
Greg McBride, senior financial analyst for Bankrate.com, says, “Two regulatory changes in particular have cut the legs out from free checking. One putting restrictions on overdraft charges, and the other limiting swipe fees when a consumer uses a debit card.”
In other words, new regulations have limited excess fees that banks charge for overdrafts and debit card use, so they’re looking to make up the money somewhere else.
Typically it’s only “preferred” customers who now get free checking, meaning those with direct deposit, or with a minimum monthly balance.
The report found that most customers are fed up, and would switch banks if rates went up any higher. Interestingly, higher-income customers are more likely to switch. Among people with at least $75,000 in their checking accounts, 82% said they would consider changing banks if fees were raised. That’s very curious, don’t you think?