Fleeing nabbed ATM fees

According to the Daily Telegraph, NAB is intending to charge its customers 50 cents per transaction for using ATMs other than its own. This gets around Reserve Bank reforms that prevented banks from charging eachother such fees. I believe and still do that those reforms are a good thing. They are highly unlikely to lead to higher fees for customers and are more likely to result in the deployment of more ATMs.

But there is another issue here. Can NAB really get away with this in the market-place? Now normally when banks do these things, like charging fees, the switching costs to take advantage of better deals at other banks prohibit the competitive mechanism. However, in this case, there is a relatively easy out — especially relative to the cost imposed on NAB customers. (And remember those costs are considerable. They will give those customers incentives to find NAB ATMs rather than foreign ones. That will involve costly search and ironically, will give NAB itself no benefit. If the fees are avoided then NAB earns no extra revenue.)

Here is the out: you go to another bank and get a simple savings account (something with low or no fees; they exist but they don’t pay much interest). You then set up an automatic transfer of funds — some amount per week — from your NAB account to that account. It might even be a credit card account. That usually doesn’t cost anything (but I am sure a commentor will correct me if I am wrong). Then you use the other account for cash withdrawls. Ta da. For me that is worth the price of not being slugged with a distortionary fee like this.

My prediction is that, if NAB goes ahead with this, it may find itself with some dramatic unbundling going on. It certainly won’t help it in getting new, younger customers. So my guess, based on rational economic theory, is that NAB won’t end up doing this. We will see.

Disclosure: I’m a NAB customer and if they charge me more for foreign ATMs, I’ll be getting that other account.

4 thoughts on “Fleeing nabbed ATM fees”

  1. I don’t know the rules now, but when I looked into a periodic transfer a few years back, there were hefty charges. One-off transfers were free. Strange. But, anyway, that’d make your plan less appealing.

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  2. Is the objector here a homo economicus or a homo kahnemanus? If the latter then fees for another account shouldn’t matter – although is it really that hard to find a NAB ATM?

    Say you ended up averaging a transaction a month at a foreign ATM. Is spending $6 a year going to cause economic hardship? You can save more than that by having one meatless meal a month.

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  3. Check out the above website for all the atm fees and charges.  At least that way you can avoid the banks with the highest atm fees.

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