The news that Bank of America is raising its ATM transaction fee from $2 to $3 for non-bank customers sends a shockwave through the wallets of anyone bothered by excessive bank fees eating into their savings.
Bank of America's ATM network is the largest in the country, and the fee hike is expected to result in millions of dollars in extra revenue for the bank -- all of it coming right out of the pockets of non-BOA customers.
The nationwide average for an ATM fee is still $2, but Bank of America's move may inspire other banks to follow suit.
Bank Of America's portfolio of tactics for hitting customers with extra fees, charges, and penalties is already a sore spot with consumers, as evidenced by a steady stream of complaints to ConsumerAffairs.com.
ATM fees, and bank fees in general, represent a lucrative and steady source of revenue for banks and lenders, particularly as the global mortgage meltdown and personal credit crunch continue.
Facing waves of losses from delinquent homeowners and foreclosed homes, banks are looking to increase their revenue by any means necessary, and charging fees for practically every transaction has become standard operating procedure in the financial industry, with no signs of letting up any time soon.
What to do
What can consumers do to avoid the ever-growing bite of bank fees every time they make a withdrawal? How can you hold on to more of your money? Here are a few suggestions:
• Find a bank that reimburses your ATM fees. Many banks offer reimbursement for fees charged when you use a non-bank ATM, but only with specific accounts or savings plans. When looking for a new bank or considering changing your account plan, make sure to investigate their ATM fee structure thoroughly and don't be afraid to ask questions about the fees they charge.
• Join a credit union. Credit unions are run by member-elected cooperatives, and depend on the financial health of their members, so they generally offer better financial terms for new accounts than banks. Most credit unions will not charge members for withdrawing money from non-credit union ATMs, or will reimburse any fees that are charged. This isn't a perfect solution, as you have to find a credit union you can qualify to join, and the credit union may require you to only use ATMs in its network, or a shared network with other credit unions, in order to avoid ATM fees. The National Credit Union Administration offers tips on how you can qualify to join a credit union, as well as a searchable database of credit unions.
• Use your credit card for your shopping needs. Paying by plastic helps you avoid losing more money to ATM fees, but it can have its own set of problems. Make sure to pay your bill in full each month to avoid penalties or interest hikes on your purchases. Consider rewards card programs that reimburse your purchases with cash deposits, or those that offer "points" you can cash in for other goods down the line. Make sure to examine any rewards card program thoroughly to avoid any hidden traps that may end up costing you more money than you earn.
• Get cash back when buying goods with your debit card. Most retailers and supermarket chains will offer you the opportunity to get cash back when making a point-of-sale debit purchase. This option is favored by Emily Davidson of Creditbloggers, as she "[hasn't] heard of a bank that charges an 'ATM fee' for this convenience -- mine certainly doesn't." You can get up to $200 in cash at most stores and you'll get the added benefit of completing two errands at once," Davidson says.
• Set a budget for yourself. The best way to avoid getting stung with ATM fees is to limit the amount of available cash you're carrying. Figure out exactly how much money you need in the course of a day or week for necessities--food, transportation, emergency purchases, and take that out from your bank at the beginning of the week, and stick to that amount. Sticking to a budget will not only help save more of your money for bigger purchases, but it will help improve your financial smarts as well.