Canada’s other political party, the NDP, has suddenly noticed ATM fees, even though they have been around since the ATMs themselves. And they claim that banks are gouging customers with these fees:
Charging people to use automatic teller machines from a bank other than their own in order to access their own cash is a rip-off that should be outlawed, New Democrat Leader Jack Layton said Thursday.
In what Canada’s big banks dismissed as little more than a display of ignorant rhetoric, Layton said the $19-billion profits the financial institutions made last year should be enough to waive ATM convenience fees.
"We believe it’s gouging when a person comes up and they want $40 or $60 of their cash and a bank is charging them $1.50 or $2, $2.50," Mr. Layton said during an election-style announcement on a Toronto street corner.
"That’s a rate of payment which is very, very high — and unfair."
Unlike the American banking system consisting of thousands of banking institutions,there are only five or six Canadian banks. As far as I know, all of those banks charge service fees regardless of any balance in the account. And customer service is generally not that good. IN a recent attempt to move my US dollar account, not one bank could tell me what percentage they charge for a US to Canadian dollar exchange. It’s about 2% by the way.
When I first moved to Canada I incurred $45 in service charges in one month. We immediately switched to a financial institution run by a supermarket chain. Even though they are run by one of the banks, they had no service changes. So clearly a bank can run without service charges.
So is this gouging? When I was a kid there were no service charges. Banks made money by using your money. Then they felt the need for higher profits, so they started charging for service. Then they started increasing those charges.
You pay to deposit money. You pay to withdraw it. You pay to talk to a teller. You pay for every bit of service you get. And really, with the interest rates so low, you’d be better off keeping your money in your mattress.
I’m a capitalist, so I believe that people have a right to make a profit. Yet I don’t feel that the service the bank provides is worth what they charge, so I bank where there are no service fees. That’s consumer choice. I also believe that it might be more acceptable to charge a fee based on the amount withdrawn, rather than a fixed fee.
Of course the standard response by the banks of rising infrastructure and operational costs is ridiculous as well. Over time in a properly run system, the cost of operating a network of ATMs should be decreasing.
Either way, I just find it odd that after years of fees this political party just noticed this.