Of Fees and Profits

You may have seen some extremist columnist sounding off lately about how much the banks are charging in fees these days. They quote statistics claiming that banks' profits used to be from investments and interest charges on loans, mortgages, etc., and now fees make up something like 40% of the profits.One thinks maybe these out-spoken, complaining writers have lost sight of the fact that the banking industry is supposed to show a good return for its business - that the stockholders expect a healthy profit on their investments - that we continue to be America's success story as a profit making business.
One might even think the writers of these articles and complaints should wise up and shut up...until one gets one's fees raised by one's bank!

I just received in the mail a notification that my annual ATM card fee is going down to $12 (it had been raised last year to $15). However, I am now limited to 10 transactions a month, and any over 10 is 75c each transaction. And I will have to pay for any transaction done on other than my bank's machines. Shortly they will be sending me a debit card, they say - whether I want one or not - that can be used at "thousands" of locations throughout the United States. These debit cards, of course, do not require a PIN in most cases, but never fear - if I notify my bank in time it won't cost me the $50 or $500 it might cost me if I don't discover the card is missing for a long time.

And much to the annoyance of those who use the ATM to control their spending, some institutions are now putting a minimum limit on how much you can withdraw from an ATM at one time, eliminating the $10 and $20 transactions.

Not so long ago we were trying to convince our depositors that going to the ATM was a good thing - convenient for them and lower cost service for us. In order to insure more use of the ATM, we ran prize contests for use, or credited accounts $1 a month for use. We put more ATMs in out-of-the-way places for handier access. And then started to charge for the use of a teller.

Now we're charging for the "privilege" of using the ATM. And it's being noticed.
Some of our financial institutions are taking advantage of the situation by advertising "free" ATM usage. It's an interesting twist our marketing people could not have anticipated ten years ago.

These "extremist" writers may have a point, but these things have a way of working out. The hoopla will settle soon. When it does, odds are the customer will be paying for using the ATM.

Copyright © 1998 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 8, No. 3, 3/98