Released: October 21, 2007

Fees jack up banks’ bottom line

Source: David Lazarus, Los Angeles Times [Baltimore Sun] (Free Registration)

The news that Bank of America is jacking up its ATM fee in some locations for non-customers to $3 from $2 prompted the usual muttering about money-grubbing financial institutions that nickel-and-dime people to death.

But Bank of America’s decision isn’t the real story. It’s the fact that virtually all banks increasingly rely on a wide variety of fees to boost their bottom line, and the trend shows no sign of abating.

According to the Federal Deposit Insurance Corp., about 42 percent of banks’ annual revenue last year came from non-interest income, which is dominated by money from fees. That’s up from about 34 percent a decade ago.

Andrew Gray, an FDIC spokesman, said this highlighted “the industry’s increasing reliance on fee-based sources of income.”

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