Bank's profit from ATMs; Miscellaneous
How do banks profit from automated teller machines? ATMs have sprouted up all over during the last couple decades, and their convenience can't be beat. But I thought banks make their money holding on to our money, so why would they bother doing something that would make it so easy for us to take our money back? I'm rarely charged an ATM transaction fee, but I suspect that using ATMs may not be as free as it seems. Please illuminate me.
Of course it's not free — the bank just buries the cost in the other fees it charges you. (Fees are how the bank makes money on your checking account unless you're one of those rare folks who can keep a hefty minimum balance.) That wasn't always so. In the 1980s many banks began charging for ATM transactions, reasoning that customers would be willing to pay for the convenience. Many weren't. ATM usage began to level off in some markets. Banking industry geniuses realized it was stupid to discourage ATM use since the alternative was maintaining a large and expensive staff of tellers. The annual cost of an ATM has been estimated at $35,000 to $65,000, which covers equipment purchase or lease, maintenance, security, telephone charges, and software. For that you get a machine that can handle transactions round the clock and doesn't make mistakes, reducing the need not only for tellers but for supervisors, customer service staff, auditors, and other support personnel.
So banks wised up and restructured their fees. In 1988 25 percent of the country's banks charged customers to use the bank's own ATMs; now only 12 percent do. A much larger percentage charge a fee for outside ATM use, that is, using a cash machine not owned by your bank. These fees are often exorbitant, $1 to $2 for a service that costs somewhere around 60 cents. But you can avoid the expense by not using outside ATMs.
The real trend now is charging customers to use tellers. The First National Bank of Chicago got national flak for imposing a $3 fee for teller transactions, having neglected to make clear that the fee won't affect most customers, since 80 percent use tellers four times or fewer per month and the fee only kicks in after six teller transactions per month. Heavy ATM usage is pretty typical at big banks. Some institutions such as Citibank report that 80 percent of their withdrawals are done by machine, and what with the rise of direct debits and deposits, banking by computer, and other automated technologies, banking moguls dream of the day when they all are.
Medical News Flash #1
As an otolaryngologist with 15 years' experience, I have had more than one occasion on which a victim of ear candling [March 10, April 21] has presented to my office with excruciating symptoms caused by melted wax adhering to the eardrum. This often necessitates minor surgery and puts the patient's hearing at risk. In addition to debunking the efficacy of ear candling, you should mention the inherent danger to hearing.
Medical News Flash #2
In reference to "Question We're Still Thinking About" in the March 10 issue: I have burped, farted, and sneezed at the same time, and I am still alive.
Doctors Levinson and Swain's patients are suffering from a trauma caused by National Lampoon in the early 70s, in whose pages there was a High Flying Rumors Contest. First prize was awarded to the following: "If you burp, fart, and sneeze at the same time, you will die." Although I've kept this information in memory with my tongue firmly planted in cheek, I suspect that some other Lampoon readers took it as gospel. I myself have used this information as way of breaking the ice at parties but never did I dream it would become legend.