Just Say No to Fee Surcharges

I was short on cash last week. There’s an ATM here in my office building. It’s from a credit union near us. Several times a year, I see this credit union promoting their services at a table near the cafeteria. Credit unions have a reputation for being “the good guys.” They are said to play fair, giving you high rates for your money on deposit and low rates for the money you borrow. They tend not to charge you outrageous fees. Credit unions can do that because they are owned by members, as opposed to trying to make a profit for shareholders.

I was disappointed to see this credit union charged $3 for using their ATM because I’m not a member of their credit union. When Bank of America first raised their ATM fee for non-customers from $2 to $3 in 2007, there was a big consumer backlash against them. People were saying how evil Bank of America was. Now that the $3 price is established in the market, we see other banks matching it without hesitance. Even a supposedly consumer friendly credit union can’t resist.

Charging fees for using their ATMs is not illegal. One can argue that charging fees to non-customers is logical: if you don’t want to pay the fee, wait until you find your own bank’s ATM. The fee is disclosed up front. The machine shows you how much you will be charged. It asks you if you want to accept the fee and proceed or decline the fee and abort the withdrawal. If you think the fee is excessive, all you have to do is decline and abort. Fair enough.

It is less known that the ATM networks already have built-in fee reimbursement. If a customer from Bank A withdraws cash from an ATM owned by Bank B, the ATM network will charge a small fee ($0.50 or so) to Bank A and give it to Bank B. Apparently for the credit union in my office building, that $0.50 isn’t enough. They want $3 on top of it. Although I’m not affected by the $3 surcharge because my Fidelity Cash Management Account reimburses all ATM fees, I wonder how much that one ATM in the building earns from all my co-workers. It must be very productive.

These fees seem to go only one way: up. When the oil price was high last year, most airlines added checked-in baggage fees for non-elite customers. They settled on $15 for the first bag, and $25 for the second bag, each way. For two bags on a round trip, that’s $80. Now the oil price is way down, but I don’t see those fees going away.

The best way to avoid these annoying fees? Refuse to do business with them. Use your own bank’s ATM. Switch to a bank that reimburses ATM fees. Fly Southwest.