Despite the fact that since 2008, where banks have had almost unlimited access to ‘free money’ through the Federal Reserve’s discount window, their balance sheets have been short liquid capital since most of this borrowing has been used to build a network of paper assets and derivatives. And because of policies that now see very little cash being kept on hand in local bank branches to support customer needs, commercial banks have returned to instituting massive numbers of customer fees that were once removed a decade ago during a time when banks were in fierce competition to signup new depositors.
And one fee in particular, and which has a greater agenda than just providing extra income to financial institutions, is the increasing of ATM fees for non-bank customers.
The average cost for using an automated teller machine that isn’t tied to a customer’s bank rose to a record $4.52 per transaction over the past year, according to a survey from data provider Bankrate Inc. that will be released Monday.
In Atlanta and New York, the average “out-of-network” cost tops $5 and can rise to as much as $8 in some places under certain circumstances, Bankrate said.
The new average rate reflects an increase of 21% over the past five years. – Wall Street Journal
Imagine if you were on vacation and needed to get cash for purchases that might not be feasible with a debit or credit card. To get $20 from an ATM that is from a different bank than you are a member of would cost you almost 25% in fees, which is on par with many of today’s payday loan operations, and even up there with under the table loansharking schemes.
In today’s reality, banks don’t need your money as they have access to almost unlimited funds via the Federal Reserve discount window at near zero percent interest. So the purposes behind these fees has little to do with shoring up a bank’s bottom line, and more with controlling the outflow of cash to the general economy. And as the need to protect the dollar and the banking system becomes an even greater priority for the government and central bank, it is the depositor and consumer who will feel the pain of policies meant to discourage your use of cash, with increased ATM fees being just the start of the next form of capital controls.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.