As the Senate debate over financial reform sizzles, credit union non-interest income remains under fire.
Hot on the heels of Regulation E looms another threat to credit union non-interest income, this time in a U.S. Senate amendment to the financial reform bill currently under debate. Congress continued its campaign to bridle Wall Street with an amendment proposed by Sen. Tom Harkin (D-Iowa) on Wednesday that would put the lid on ATM withdrawal fees at 50 cents per transaction, The Wall Street Journal reports.
“Consumers are being charged ATM fees that are well in excess of the cost of providing services, in some instances, as much as $5 per withdrawal,” said Harkin, on the Senate floor. “These fees are outrageous, are anti-consumer, and they need to be reigned in.”
Harkin casts the actual cost of processing an ATM transaction at approximately 36 cents, while the Federal Reserve lists the average withdrawal fee to be $2.66. “It’s unfair for people to pay that much to access their own cash,” Harkin said.
What should credit unions prepare for in the face of increasing regulations? In a recent survey of more than 150 credit unions, Callahan & Associates found ATM fees account for 7.8% of credit union non-interest income. Although such fees don’t quite match the significance of overdraft fees at 28.1% of total non-interest income, credit unions will still feel the loss. In 2009, credit union non-interest income reached $11.6 billion, putting revenue from ATM fees at about $900 million—a hefty sum in today’s tight earning environment.
Want to learn more? Read Passage of ATM Fee Cap Legislation Would “Cripple the Industry”