is it illegal to charge a fee for ATM/ credit card transactions? One of my professors told me it is...?

Question

I heard that its illegal to charge any transaction fee for using the plastic sine it is supposed to work just like cash. Is this true?

Answer 1

No. First, its completely legal to charge a fee, one way or the other. ATM cards can have fees assesed by your bank or the merchant if used as a debit card, debit cards are less regulated than credit cards. For credit cards- its still legal, but its against the Amex,. Visa, or Mastercard rules for a merchant to charge a consumer extra to cover the fees that they have to pay when you use the card. So its definately not illegal, but for credit cards, its definately against the card's merchant agreement, and the merchant can have their ability to accept certain cards taken away from the, if they are passing the fee along to consumers. Gernally a merchant pays 2-3% of the purchase price back to the originating bank and credit card company.

Answer 2

Not true! A credit card is a loan from the issueing bank or company. If you use it to get cash from an ATM, you are borrowing cash, and that comes under a whole different set of rules than when you use it for purchases. The interest rate is higher, and charged from the day that you complete the transaction, rather from the due date of your normal payment. Also, if you use the card at an ATM not directly connected to the issuing company or institution, you will most likely be charged a fee by the ATM's owner for using it, that will show up on your statement. This fee can be as high as $5 or more, depending on where you are.

Answer 3

No. There are transactional fees across different ATM services -- if you have an ATM with, say, BankAmerica, you already pay fees for their card, thus any transactions directly with BankAmerica are already paid for. But if you go to a Nations Bank ATM, for example, to withdraw money, you haven't paid for their services, and they can charge you a fee (through BankAmerica) to cover their expenses in collecting their money from BankAmerica.

The old saying aplies here: TANSTAAFL -- There ain't no such thing as a free lunch.

So, which professor told you this? Economics, Chemistry, English, Philosophy?

Answer 4

1) No
2) You are using a machine that is not yours to obtain a service from a Plastic Card that is not yours either.

Most banks will let you have a Plastic Card for FREE but that card costs money.

The bank is betting you will eventually use some of their services and they will get their money back.

Also, most ATMs are located in convenient locations at Malls, Hospitals, Airports and so on and the bank needs to pay rent for every square feet they are using.

If banks did not charge you any fees then they cannot buy more ATMs and they cannot place them at more convenient locations.

You would have to drive to the nearest bank and that would cost you way more money in gasoline than the current charge.

In fact, if you don't want to pay any ATM fees you can walk to your nearest bank branch and they will give you the money for FREE.

If you must drive to your bank then it is likely they are actually saving you money every time you use an ATM.

In fact, they should charge twice what they are charging now so they can place more ATMs in more locations closer to you.

Also if you are taking money out of an ATM after midnight and before dawn they should charge you $100.00 (Who uses an ATM at 3 AM?)

Answer 5

I work for American express and I know that it is not illegal to charge fees for ATM or credit card transactions. These companies must charge a fee to cover their expenses, how else can they make a profit? you probably just have a liberal teacher that hates paying anyone a profit!!

Answer 6

No it's not true. There's a reason they're called "Credit Card Service Providors."

The ATM's are usually owned by certain banks, it costs them money to operate, support, and resupply those machines. Now if you have a credit card from that bank, most cases using their ATM's is provided to you as part of their benefits for using their banks, trust me they make plenty of money off of the money you deposit in their bank. Now if a person from a different bank withdraws money from their ATM's it just a wasted expense for them. They gain nothing from the transactions and are actually supporting their competitor, so instead they charge people using cards from other banks to curb their expenses.

Answer 7

Actually it is very legal. You aren't required to use debit cards so this convenience can be charged to you. Also, yes they do work like cash but at times they are run like credit cards so sometimes there has to be a small fee charged.

Answer 8

I usually only use a debit card, and I hardly ever carry cash. The law does not affect debit cards. The only time that I use a credit card is when I travel & then I pay it off as soon as I can. This law should force people off credit.

Answer 9

no...it's an exercise in free markets. As long as the user is notified of the charges before completing the transaction, and the user agrees (by completing the transactions), then it is perfectly legal.

Now, is it moral? That's something entirely different.

Answer 10

hello are you sure a professor told u that yes they can charge u just goto a bank other than yours and use your debit card to withdraw money and watch them debit your account for that 2.00 or that 1.50 and then your bank can charge you for using another ATM other than theres he needs credit counseling