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Those Dirty Banks!

Want to make people mad? Raise their bank fees.

That's exactly what Bank of America (NYSE: BAC  ) did yesterday, increasing its transaction charge for non-member ATM users from $2 to $3. Most expect that major competitors such as JPMorgan Chase (NYSE: JPM  ) and Citigroup (NYSE: C  ) will shortly follow suit.

I get what you pay for
As I've remarked on numerous occasions, I'm no fan of bank fees. I keep small balances in no-fee checking accounts, and I use online savings accounts and money market funds to earn higher interest on the rest of my savings. I'll also go without cash rather than pay a buck or two for an out-of-network ATM.

But I'd be the first to admit that if everyone did what I do, banks would go out of business. They make their money from people who keep thousands of dollars in their checking accounts and earn next to nothing in interest. And they make a fortune from people who bounce checks or use their overdraft protection regularly. The great deal I get is possible only because of others whose accounts are more profitable for my bank.

So if Bank of America decides to put up a network of 17,000 ATMs to serve customers and non-customers alike, why shouldn't the company expect to make money from it? Heck, let 'em charge $10. I'll never pay it.

What's the problem?
If bank fees make you mad, all you have to do is figure out how to get around them. Luckily, when you look at all of the fees that banks charge, ATM fees are among the easiest to avoid. Just compare ATM fees with some other fees that banks typically charge. With monthly service charges, you often have to maintain a high minimum balance -- from $1,000 to $2,500 or more -- before your bank will waive its fees. Often, fees for other services, such as cutting a cashier's check, having a signature notarized, or buying travelers' checks, are almost impossible to get around.

But to eliminate ATM fees, you don't even have to stop using ATMs. You just have to go to your own bank's machines. While your local bank may not have 17,000 locations around the country to serve you, it should have enough to meet your needs -- at least most of the time. And if you find yourself paying a bunch of ATM fees because your bank doesn't have machines where you need them, you should probably think about switching to another bank that does.

Cash is old-fashioned
In addition, for many people, having cash on hand just isn't as important as it was in the past. With credit and debit cards becoming so common, you can travel nearly anywhere without dealing with greenbacks at all. Paying for a pack of gum with a credit card may seem over the top, so you'll probably want a little money for small purchases. But carrying a wad of cash just doesn't make sense anymore.

Still, Bank of America clearly thinks that cash isn't going away soon, and it wants to profit from that. If that makes you mad, the solution is clear: Stop using the ATMs that charge those fees.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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11/21/2014 4:02 PM
BAC $17.12 Up +0.12 +0.71%
Bank of America CAPS Rating: ****
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