Bank Hikes ATM Fees to Record High

In a move that's expected to prompt higher fees industrywide, Bank of America has raised, to $3, the amount it charges non-customers to withdraw cash from most of its ATMs.

Bank of America, which has the largest ATM network in the nation, could affect millions of consumers with its new $3 surcharge.



The fee, up from $2 per withdrawal, was quietly rolled out across the country in July and August. It's the highest such fee ever imposed nationwide by a major bank. Because Bank of America has the largest ATM network in the USA, the higher fees could hit millions of consumers.

The development will likely lead other banks to raise their ATM fees, too. "Banks often move like a school of fish on punitive charges such as ATM surcharges and credit card late fees, so it's just a matter of time before others follow suit," says Greg McBride, a senior analyst at Bankrate.com.

Citi , Chase, Wachovia and Wells Fargo say they have no immediate plans to raise ATM fees but add that in setting their own pricing, they review what their competitors are doing.

At Bank of America, spokeswoman Betty Riess says the higher fees help offset the "significant investment" the bank has made to upgrade and expand its cash machines. The bank decided to charge non-customers a $3 fee at 10,700 ATMs — nearly two-thirds of its network — in bank branches and supermarkets as a way to "reduce wait time for our own customers," Riess says.

Most non-customers who use Bank of America ATMs, Riess says, do so at shopping malls, convenience stores and airports; the withdrawal fee at those machines remains $2. (Most people also get hit with a separate fee by their own bank for using another bank's ATM.)

Banks increasingly rely on fees and other charges as a more "stable and predictable" source of income than revenue tied to loan products, says Gwenn Bézard of Aite Group, a consulting firm.

Fees have also become more important to banks as the gap between the money they earn on loans and what they pay out on deposits has narrowed.

In recent years, banks have raised all sorts of fees — for overdrawing an account, paying late or exceeding the limit on credit cards.

"There really are no bank-fee-cap laws to speak of," says Ed Mierzwinski of the U.S. Public Interest Research Group. "The sky is the limit for bank fees."

Kevin J. Hills, a janitor in Temple Hills, Md., who banks with a credit union, avoids the ATMs of other institutions when he can. But he says Bank of America's widespread ATMs are often the most convenient option for him.

Still, "$3 is too much for a working person," Hills says. "It takes me $1.35 to get to work" on the metro, so a $3 fee is more than a day's worth of commuting.
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