Every American at some point has stood in front of an ATM and gasped as the screen showed just how much the machine was charging you to access cash from your very own bank account. The national average per ATM transaction is $2.50, but in some parts of the country, it can be as high as $5.00.
The most shocking part of this fee is that, on average, the real cost of processing a transaction today is only 36 cents or less. Where does the rest of the money go? It is going to the big banks, the big card networks and independent machine owners.
In recent years, Congress has acted to protect consumers by setting appropriate limits on the types of fees that financial institutions can charge consumers in areas such as credit cards, but one area that remains unregulated is the fees consumers pay to use ATMs. Currently, there is no limit on what the operator of an ATM can charge a consumer for using that machine.
This is unfair and it is a policy we must address head on.
The Senate has an opportunity to do so in the financial reform package now moving through Congress, The Restoring American Financial Stability Act of 2010. An amendment that I have proposed for inclusion in the pending Wall Street reform bill protects consumers.
My amendment requires the new Consumer Financial Protection Bureau to ensure that fees charged to consumers at ATMs bear a reasonable relation to the cost of processing the transaction. Essentially, it says that the big banks can set up a reasonable charge based upon what the costs are, but no more than 50 cents per transaction. Think about that: anytime you go to your ATM machine, no matter how much money you withdraw, the machine can only charge you a reasonable fee for the convenience, but in no case more than 50 cents.
Some people may think that $2.00 is not much, but here is the other unfair thing about it. The average person going to an ATM machine takes out on average $20.00 or $50.00 to get them through a day or two, and they are charged $2.50 for accessing that money. Yet someone else may withdraw $500.00, and they pay the same $2.50. The burden falls more heavily on low-income and moderate-income people. That is grossly unfair. And that is why groups like the U.S. Public Interest Research Group, the Consumer Federation of America, Consumer Action, Consumers Union and the National Consumer Law Center support my amendment on behalf of their low-income clients.
Until 2002, in my home state of Iowa, the law required any bank establishing an ATM make it available at no cost to all users. But in 2002, this reasonable Iowa law was preempted by Federal banking regulators. According to the New Rules Project, national banks collected nearly $5 million in ATM fees from Iowa consumers in the first six months after the Iowa law was overturned. Iowa credit unions data said it was about $10 million just in the first year. Add that up and it equals a lot of money.
Our mission in financial reform is to level the playing field for the average Joe. My amendment goes to the heart of that mission, ensuring consumers are no longer victimized by unfair fees and putting the balance back where it should be: on the side of hardworking Americans.