Should ATM Fees Be Capped at 50¢?

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You need cash, and you’re not anywhere near one of your bank’s ATMs. So what do you do? Most likely, suck it up and accept the fee assessed for getting cash from a unaffiliated ATM. The average fee seems to be $3 nowadays, though it can run you $5 in some casinos or airports. And what does the transaction actually cost the banks involved? All of 36¢.

Sen. Tom Harkin wants to stop the ATM fees cash grab. He just introduced an amendment that would cap withdrawal fees at 50¢ per transaction, reports the WSJ:

“The cost of fees that consumers pay has skyrocketed,” he said in a speech on the Senate floor.

Banks charge an average of $2.66 each time a consumer uses an ATM to withdraw cash, according to the Federal Reserve…

“It’s unfair for people to pay that much to access their own cash,” Mr. Harkin said.

Unsurprisingly, the National Association of Federal Credit Unions opposes the amendment, and disputes the 36¢ figure cited by Harkin:

NAFCU President Fred Becker told Senate leaders this may cover the cost of processing an ATM transaction, but it doesn’t reflect additional costs associated with maintaining ATMs or protecting members and customers, and their money. This fixed, 50-cent cap “could ultimately force many financial institutions, including credit unions, to close” their ATMs.

Somehow, I doubt that. Seems like technology will continually bring down the cost of using an ATM, though the markup isn’t nearly as bad a rip-off as a 20¢ text message. Besides, in any remotely populated area, it seems like there’s an ATM in every third storefront. They wouldn’t be there in such quantity unless they were big money makers, and it wouldn’t be the worst thing if some of them disappeared.

On the other hand, part of me thinks the marketplace should dictate what kind of fees can be gotten at an ATM. For the most part, this is an entirely avoidable fee. With a little planning, occasional slight inconvenience, strategic use of credit or debit cards in stores, or simply by choosing a bank that reimburses you for ATM charges, you’ll never have to pay a fee for accessing your money.

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