Bank of America has raised the fee it charges non-customers to withdraw cash from most of its automated teller machines to $3 from $2, a move that may prompt rivals to follow.
AP
The largest U.S. retail bank said it began charging the higher fee on July 31 and within a month was assessing it at about 10,700 U.S. ATMs in its network of 17,183, by far the nation's largest.
Bank of America, based in Charlotte, North Carolina, made the changes at branches and in larger offices located in such places as grocery stores. It said the fee remains $2 at 6,300 "off-site" locations such as malls, airports and universities, where it says non-customer traffic is higher.
"Banks have had earnings squeezed because short-term interest rates rose relative to long-term rates, and they look to fees to offset that," said Bert Ely, an independent banking consultant in Alexandria, Virginia. "If it seems to stick and be a net plus for Bank of America, others will follow."
Bank of America is the second-largest U.S. bank by assets. Rivals including Citigroup, JPMorgan Chase, Wachovia and Wells Fargosaid they don't plan broad-based ATM fee hikes but do evaluate the cost of ATM services -- as well as what their rivals do.
Average Fee Doubles
The average ATM surcharge for non-customers was $1.64 in 2006, nearly double that in 1998, according to Bankrate.com. Banks are also boosting other fees, often assessing $35 fees on
account overdrafts and $39 late fees on credit cards.
USA Today and the Charlotte Observer earlier reported the new $3 ATM fee.
"In order to maintain and grow (our) network, it's appropriate to charge people who are not our customers," Bank of America spokeswoman Betty Riess said. "We want to provide the most convenient ATM access for our customers."
The fee remains $2 in Chicago, where Bank of America will soon grow when it completes its $21 billion purchase of LaSalle Bank from Dutch bank ABN AMRO, Bank of America's profit totaled $21.1 billion last year.
Not everyone likes the $3 ATM fee.
"I'm not happy at all. I won't go again," Tennyson Bardwell, a filmmaker from Saratoga, New York, said after withdrawing cash from a Bank of America ATM in New York's Times Square. "I feel burned about it. I use non-bank ATMs a lot, and I think the fee should be smaller."
Wachovia Testing $3
Wachovia assesses a $1.50 to $2.50 ATM surcharge, depending on the market, and is testing a $3 fee in some markets, spokesman Michael McCoy said. Newer markets such as California,
New York and Texas don't face the higher fee, he said.
Citigroup and Wells Fargo charge $2, while JPMorgan Chase charges $1.50 or $2 depending on the market.
Customers are usually assessed a separate charge by their own banks when they use other banks' ATMs. But several banks are trying to minimize this bite.
PNC Financial Services Group, Toronto-Dominion Bank's TD Banknorth and Wachovia say they reimburse fees that some customers incur at other banks' ATMs. JPMorgan Chase and Washington Mutual, meanwhile, often do not assess their own charges when customers use other ATMs.
Ely, the consultant, said Bank of America's higher ATM fee could actually add customers.
"It's possible that if they increase fees enough, at the margin it will encourage some customers to open accounts, to avoid them," he said.