[orf]

As someone from the UK I always find it astounding that Americans are used to paying money to.. withdraw or deposit their money. How did this become the norm? I find it a bit disgusting actually.

The only cash machines that charge over here that I've seen are rented ones at packed events (clubs, concerts etc).

[mikeash]

It's not the norm. Most Americans (at least in my experience) will go out of their way to use an ATM that doesn't charge them. Accordingly, picking a bank with a large ATM network is a major consideration when choosing a bank. Some smaller banks compete with this by reimbursing fees charged by out-of-network ATMs, making all ATMs effectively free.

It is certainly possible to pay for those services, but it's not normal. Some people let it happen out of laziness, or due to not being aware that they can do better.

We do have a fees problem, but it's mostly with other services. For example, many banks will charge some outrageous amount (like $5, outrageous compared their cost) to give you an electronic copy of a past bank statement. High overdraft fees are common. If you accidentally use your debit card to make a purchase that exceeds what you have in your account, the bank will often charge you a ~$35 fee rather than reject the transaction. This is optional, but they push it hard and sell it as a "service," since it means you're never left unable to complete your transaction. Never mind that being out a bunch of money is bad too.

Even worse, some banks (at least for a while) would intentionally maximize your overdraft fees by sorting your transactions on any give day from largest to smallest before applying them. For example, imagine if you have $99 in your account, and you use your debit card to make purchases, in order, of $1, $1, $1, and $100. The last transaction should overdraw the account, hit you with a $35 fee, and your balance will be -$39, right? Wrong! They'll run the $100 transaction first, overdrawing the account, and then run the $1 transactions on the overdrawn account. Net result: four $35 fees and a balance of -$144.

So yes, many of our banks suck, especially larger ones, but it's not quite as bad as everyone paying to withdraw and deposit.

[snuxoll]

I believe the CFPB has at least put the fear of god into most banks, at the very least Wells Fargo changed from largest-first to time-of-transaction ordering for debits from the account in the past couple years - and I believe most of the other big banks have done so as well.

Of course, the CFPB is looking pretty dead at this point, so who knows what they'll do after Trump dismantles it.

[AlwaysRock]

I've got a Charles Schwab account mainly because it refunds all my ATM fees at the end of the month. It's great never having to run around looking for the right brand of ATM.

[CaptainZapp]

I was amused about cash machines at major English banks blurting out:

FREE CASH

Of course that unfortunately only means that you're not charged for the withdrawel, but the cash doesn't really come free.

[theklub]

I don't think it is the norm. Only time I've paid fees is at the ATM.

[Symbiote]

ATM fees are unusual in the UK, as the parent post said, though we use the term "cash machine".

Using a cash machine is free, for the majority of cases — those in banks, supermarkets, shopping centres, railway stations and so on are run by one of the banks and are free for customers of all banks to use. It doesn't matter if the machine or customer is with/is a major bank or a small one, they're all on the same network and charge the same: £0.

The exception is captive markets. Cash machines within a stadium, nightclub or a convenience store often charge. I've never used one of these, it's so easy to avoid doing so.

[moftz]

The fee isn't a huge deal the times I've needed an ATM and my bank didn't have any of theirs nearby. It's a couple bucks which isn't too bad.

Free would be nice but I can understand why banks would charge non-customers fees. If your ATM is in a very high traffic and convenient place, you are going to be servicing and refilling the machine more often which costs more money. If you can control the usage a bit by charging non-customers a fee then you can reduce service costs.

[Symbiote]

In Britain, I think the banks charge each other. According to [1], 98% of withdrawls in the UK are free.

I assume this averages out amongst the large banks, who probably each have their fair share of convenient places. The small banks pay for their customers' convenience; presumably a very worthwhile cost for some of the new banks or Internet-only banks.

[1] http://www.link.co.uk/

[2] http://www.link.co.uk/about-link/statistics/

[TDL]

People usually pay fees for using ATMs outside their banks network (some banks join broader networks in order to offer more ATM locations to their customers.)

[_asummers]

A few banks (USAA, Schwaab, others) offer ATM fee reimbursal, but most US ATMs will charge you unless you're part of that bank's network. It's really not the best, especially when you're at cash only places, which seem to be popping up a lot near me.

[beejiu]

In the UK, the vast majority of ATMs are free.

[rtkwe]

One reason I think is that a lot of the time you're not withdrawing money from your bank's ATM or one associated with any bank at all, partially because of sheer land mass, so the operator has to have some way of recooping the expenses of operating those machines. A lot of banks provide free withdraws from their own ATMs and some even just the fees for their customers like my bank.

[chrisseaton]

> I find it a bit disgusting actually

But withdrawing and depositing money is a service that costs the banks money to do doesn't it? I'm can see why you don't like but I can't see it as morally 'disgusting'.

Would you look after someone else's meagre current account for them, and give it back on demand, for free? I wouldn't.

I don't really know who covers that cost in the UK. It's certainly not interest they earn lending out our savings is it? Especially this type of customer since they have no savings because the point of the card is to encourage them to do so, and since interest rates are so low.

Who is paying to cover the costs of a basic bank account of someone who doesn't save? I've no idea.

[orf]

> But withdrawing and depositing money is a service that costs the banks money to do doesn't it?

It's literally their job. It's their function. Why am I reimbursing them? I'm giving them my money essentially to invest, why am I also paying them to support basic business functions on my money, with my money, while they make money using my money?

It's easy to say "hurr durr why are you paying them for a service they provide, who does that??" but that's missing the point. Banks are a special case.

> I can't see it as morally 'disgusting'.

It disproportionately affects the poor, and for no real reason than 'I can charge this so I will'. Apparently some places charge you to even check your balance? What the hell.

> I don't really know who covers that cost in the UK

The big, fat, rich banks do. Because the total cost of running all their ATM's is a fraction of a rounding error on their yearly turnover.

[stult]

Historically, retail banks made their money off of the spread between their loan interest rate and the rate they pay out on deposits. So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread. So for a bank to make money off a regular joe who doesn't have enough money to access investment banking services, they need to charge fees to make a profit. For example, if you have an average $1000 in your account, the bank may only make $10 off of that in a year. Many lower end clients, the ones who tend to pay high fees for overdrafts, have even less money than that deposited on average. Also it's worth pointing out that most banks charge withdrawal fees only if you use another bank's ATM. It's entirely possible to have a checking or savings account at a bank and never pay significant fees if you don't overdraft or drop below minimum amounts. Of course, those issues tend to affect poorer customers disproportionately, but it's not without reason even if it is problematic socially.

[dmurray]

> So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread.

It sets a floor for the spread, not a ceiling. All else being equal, the bank should make more money when the amount of interest it has to pay its customers drops.

[chrisseaton]

> I'm giving them my money essentially to invest

But what about those people who aren't giving the bank any meaningful capital to invest? What is the bank getting in return in that case?

Or are you arguing that banks should be forced to provide it as a kind of social service even if they don't earn anything? I can understand that kind of point of view.

[CaptainZapp]

  Or are you arguing that banks should be forced to provide it as a kind of social service even if they don't earn anything?

Since banks, especially systemic critical, large banks make a shit ton of money based on an implicit guarantee by the tax payer, yes, I'd argue exactly that.

[orf]

The answer to "not enough people are giving banks capital to invest" is not "charge people more", it's to work out why nobody is putting their money in banks. Could the charges be a factor? Or a paycheck-to-paycheck economy?

The people not giving the bank any meaningful capital are going to cost them much/anything,because it's not as if Joe Bloggs with $500 in his account is going to be doing a thousand withdrawals and balance checks a month.

The point is the banking fees hit those who can least afford to pay them the most. It doesn't have to be like that, and I can understand a kind of point of view that supports it.

[coredog64]

In many countries, this limited bank runs out of the post office. TBH, that isn't a terrible idea for the US. It would shore up the USPS, which primarily makes money by delivering junk mail, and it provides lower cost banking for those who would wind up paying check cashing fees.

[fefesafaea]

At the scale larger banks are operating at, you could argue that even customers storing a few dollars each represent a significant block of capital in aggregate.

It's also clear that banks aren't losing money. What's at issue is how they earn their money and at whose expense.

[literallycancer]

So, where I live there's at least 5 different banks that offer free accounts, domestic transfers are free, and I think about three of them offer free withdrawals from any ATM in the country. Withdrawing from a foreign ATM in Europe is like 0.3 EUR. Oh and they give you a card for free, of course.

And it's not like they are about to go out of business either.

[Fifer82]

When banking becomes optional, I agree, however I need a bank and I ain't paying to take money out of it. When banking is optional, by all means they may charge, but I will take my cash in £20 pound notes in Royal Mail Special Delivery at the end of the month cheers!

[chrisseaton]

I can't understand this point of view. Food isn't optional, and you still have to pay for that. Why should banking be free?

[VLM]

billing systems always expand to be as maximally complicated as the system will survive. Consider telephone billing toward the end of the last century, until the cost of billing exceeded the revenue from exotic billing systems, there were all kinds of insane schemes about internal, intra-LATA, inter-LATA, in-State, nationwide-LD, international, it was a complete circus. Eventually the cost of administrating that exceeded every other cost of providing service and now we just get "minutes" or even unlimited (provided with a weirdly billed data plan of course)

For another laugh buy a house or car with a loan and there's zillions of little fees and commissions tacked on to the base price. Complexity only increases over time, and it only decreases with collapse.

This is part of the logic of the old great depression "liquidate liquidate liquidate" guy who sounds heartless in retrospect but in practice the only way to reallocate poorly allocated resources in the modern capitalist system is to flush and start over, so not knowing the GD was going to be as bad as it turned out, the guy was correct, the faster the obsolete stuff gets flushed, the faster we get back to real living. Which is analogous to current conditions, and why many people are unhappy nothing has been fixed in the banking system (or another example is health care, obamacare and trumpcare have in common that they fix none of the core problems, which is our health care allocation system is an expensive disaster)

[orf]

You don't order food from a restaurant and have the restaurant take/withhold a portion of your meal off you to cover the cost for bringing it from the kitchen to your table.

[nightcracker]

Those are the costs associated with running a bank. It's paid for by giving them access to our capital, that they can use to invest.

Have we forgotten what a bank is for? It's to conveniently and safely store money. Part of that convenience is to withdraw and store money at many locations. If a bank didn't offer that they wouldn't get my money.

[rhino369]

"Free checking" is a relatively new practice in banking that really only caught fire after ATMs were invented. Banks would charge fees on transactions--like most financial services do.

Even now, most free checking accounts only require a certain amount of money, transactions they collect fees on, etc.

With interest rates so low, they don't make much just holding onto 500 dollars for someone.

Savings accounts had less fees, but you couldn't use them to write checks out of, etc.

[chrisseaton]

> It's paid for by giving them access to our capital, that they can use to invest.

What capital? The people referred to in this article don't have any savings. Many working class people have no savings at all, and only a few thousand in their current accounts.

[alkonaut]

A person being a customer of a bank means the bank has first access to that persons business when they need mortgages, other loans, home insurance, buying funds for retirement savings etc.

I suppse where bank accounts are free including services like ATM that might be an indication that banks compete for all customers - which might ni turn be an indication that all customers are reasonably likely to buy financial products such as taking loans or savings products in the future.

[watwut]

Which does not make this offer reasonable, it is still ripoff. They are better off keeping money in box at home.

Criticising this offer is as valid as criticising any other expensive and bad service.

[psyc]

Do believe that banks are setting their fees based on their associated costs?

[fefesafaea]

I can't give a super accurate history of how we got here, but it seems as though it's been a gradual process. Once the banks saw that people at bars, casinos, and high end hotels would pay these 'convenience' fees, they said to themselves, "why not do this everywhere?"

It also ties in to how banks are regulated. Now again, I'm not super well versed in the history here, but as I understand it, after the stock market crash in the 20's, congress passed the Glass-Steagall act which, among other things, said that the banks either had to be an investment bank, or a commercial bank, but not both. That way the commercial banks, which are holding regular folks money, can't gamble it all away. That seemed to work pretty well, so much so that congress was later convinced to repeal large portions of Glass-Steagall.

Once that happened, investment bank culture, which never really left commercial banks, once again came to prominence, along with it's emphasis on making money for shareholders.

The reason I mention all that is to say that during Glass-Steagall commercial banks had to go back to making money slowly but surely through giving out safe loans and charging modest fees for basic services. In the meantime, their shareholders, having had a taste of the large dividends generated by investment fees and the like, came to expect more than the safe, modest returns commercial banks used to provide. In order to appease investors, commercial banks then had to look for other ways of generating profits. That's where things like atm fees, excessive overdraft charges, monthly checking account fees, and the like come in.

The fees and stuff actually got so bad that congress passed a law mandating that the banks had to allow people to opt out of overdrafts, among other things. Unfortunately, this law had been kicking around for several years by the time it got passed, so the banks had plenty of time to weaken it and/or find work arounds. For instance, where you used to get a single overdraft charge for each time you overdrafted, many banks went to a system where you got a daily charge for every day your account was in the negative. I've literally seen someone crying in the bank upon being told that what should have been a single $40 charge had grown in the course of a week or so into a $400 charge. Sadly, this is just one of many such examples of how commercial banks have changed their practices to prioritize profits over public service.

Hope that all made sense. As I said, I'm not a historian, and a lot of the stuff I discuss is widely debated, but if you find it interesting there's a lot of good info on wikipedia and youtube, not to mention your local library. :)