Big banks rack up $6.4 billion in ATM and overdraft fees
I thought that this was a very interesting article to read. I don't know about you but the bank that i have does not have atms around here so every time i go to get money out i have to pay a service charge. i have always wondered how much money the banks make off that, according to this article banks make a little over 1 billion dollars from theses charges. The article then goes into detail about how banks make over 2 billion in maintenance fees and almost 5 1/2 billion in over draft fees. i understand that banks have to have some fees to keep there customers in line so they don't spend more money then they have in there account but should a bank really be able to charge you for holding your money for you?
link: http://money.cnn.com/2017/02/22/investing/atm-overdraft-fees-rise/index.html?iid=SF_LN
4 comments:
It is interesting to see just how much money banks make from fees like that however, I do think it can be justified. Banks charge overdraft fees to make sure that people do not take more than what they have. Similarly, the ATM fee is to make sure that people use their ATMs and not other banks. This is usually told to you when you sign up for a checking account and you have to accept the ATM fee when you go to the ATM. To avoid such fees it might be beneficial to move your money to a bank that is in your area and in the place you are visiting/temporarily living. Bigger banks such as Chase and PNC usually have more locations than a local bank that is just in your hometown. Similarly, getting cash back at a store instead of accepting the service charge is another way to not get charged for taking cash out.
It seems like its a two way street, but the businesses may be getting more out of the deal. Consumers are able to collect interest on their accounts, though probably real interest rates aren't much higher than the inflation rate. So I could see how these atm fees and cancel out and outweigh any sort of consumer benefit gain from keeping their money in an interest earning account.
I agree with the ways that Morgan talked about to avoid bank charges. It definitely teaches some people to be more responsible for managing their money. People can also open a checking account at a credit union or online bank. A research found that the average overdraft fee at brick-and-mortar banks was around $34, while credit unions charged $28 and online banks charged the least, about $19 on average.
I never knew how much banks actually made off of service charges. The charge is a good way for banks to generate extra revenue and helps people manage their money, but charging someone who does not have access to their bank's ATMs should not be charged every time that they want to get money out. I always try and avoid extra charges because I do not want to pay to have access to my money.
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