The news for savers keeps getting worse. Not only do you get no interest on your savings, but you’re also paying more to access your own cash.
Seven years of ultra-low interest rates have cut into banks’ profits, and they’re trying to make up for it by charging more fees.
Bankrate.com said in a recent survey that the cost of withdrawing cash from an automated teller machine that’s not affiliated with your bank has jumped 21 percent in the last five years, to a national average of $4.52.
I spoke with several banks in ScottsValley and they all said they charge between $2 and $3 – but there are two sides to the transaction when you use another bank’s ATM.
For example, if you are a Wells Fargo customer withdrawing cash from a Chase ATM, Wells Fargo will charge you $2.50 to get cash from a non- Wells Fargo ATM. Chase will charge a non-Chase customer $3 to use their ATM. Total cost of the transaction: $5.50.
The simple way to avoid these fees is to only use ATMs at the bank that holds your account. Wells Fargo, Chase, Comerica and Bank of America all said they charge no fee for their customers to use their ATMs.
Some of the banks have ATMs at other locations. For example, there is a Wells Fargo ATM inside the Felton Safeway store. There would be no fee for a Wells Fargo customer to use that ATM. If you want to find your bank’s closest ATM, you can find it on the bank’s website or by calling the bank. Many banking apps have ATM locators that can help you find a fee-free ATM nearby.
Smaller banks and credit unions may have fewer ATMs, but some of them team up with other financial institutions to form networks of ATMs you can use for free.
ATM fees are only one of the fees that banks charge. There are many others, like monthly checking account fees and overdraft fees. All of them may be negotiable and may depend on how much you have on deposit at the bank and whether the bank is servicing your mortgage.
You can eliminate most bank fees by using an online bank. Some allow you to use other banks’ ATMs and will reimburse you for ATM fees. Online banks often pay higher interest rates on savings and checking. They can afford to be more generous because they don’t have to spend a fortune renting buildings in prime locations, like bricks-and-mortar banks do. But if you need to speak to a banker face-to-face, you’re out of luck. You can, however, speak to a banker by calling an 800 number.
If you’re thinking of opening an account with an online bank — or any other bank — make absolutely sure it is insured by the Federal Deposit Insurance Corp. Credit union accounts should be insured by the National Credit Union Administration.
The pressure on banks to raise fees is likely to continue, as interest rates hover around zero, reducing the profits banks make from lending money. Rates don’t appear to be heading higher soon, as the Federal Reserve declined to raise them at their meeting last month. They meet again at the end of this month.
Mark Rosenberg is a financial adviser with Financial West Group in Scotts Valley, a member of FINRA and SIPC. He can be reached at 831-439-9910 or mr********@fw*.com.
