Canadian bank Wells Fargo is coming under fire for charging a $3 fee for depositing large amounts of money from the bank’s virtual checking account.
Wells Fargo said Wednesday it will charge a fee for each dollar withdrawn and the fees apply to deposits made with a virtual account starting at $500.
The new fee is designed to help customers understand the financial risk associated with using virtual checking accounts.
The bank said it has not seen any other bank charge such a fee, although some other banks do.
Wells said the fee is part of its efforts to improve customer experience and help customers manage their finances more safely.
“With the recent change in the regulations, we wanted to take a quick look at how we would be implementing a fee structure to better serve our customers, so we have created a new fee structure, which will apply to virtual accounts,” Wells Fargo CFO David J. Brown said in a statement.
The fee will be added to the customer’s deposit and credit card balance and will apply automatically once the account balance reaches $500 in total.
Customers who use virtual accounts can withdraw money up to $500 from the account within 24 hours of making the deposit.
“In addition, we have made significant changes to our process to reduce the burden of fees and increase customer safety and convenience, and have made a commitment to be a transparent and accountable bank,” Brown said.
“We know our customers want to make informed decisions when making financial decisions, and we have carefully reviewed our processes and policies to make sure we’re taking the right steps to keep customers safe and to provide them with the tools they need to manage their money.”
Wells Fargo announced the new fee on Wednesday in an email to clients.
The company said the new fees apply only to deposits in its virtual checking and savings accounts, and will be phased in over time.
Wells will not be charging fees to customers for withdrawals in its other accounts, including its existing money market mutual funds.
Wells also said that customers who withdraw money from its digital checking account are free to use the funds in the other accounts.
“The fees for depositors will be reflected in the customers account,” Brown wrote.
Wells announced the changes last year and has made them mandatory for all new customers.
However, some customers who are already Wells customers have complained that they have been charged the new $3,000 fee.
Wells did not immediately respond to CBC News’ request for comment.
A spokesman for the Canadian Bankers Association told CBC News that the bank has made “significant changes to its processes” to address customers concerns about the fee.
“While we recognize the need to reduce fees and ensure customers have access to their accounts as they have in the past, we are not in a position to provide a definitive answer to the question of whether or not we will impose a fee,” said Greg Hutton.
“However, as the bank is required by law to notify customers if there is a change in its fee structure for virtual accounts, we will be monitoring the situation closely to make any changes to the fee structure.”
Wells is not the first Canadian bank or financial institution to charge a $5 fee for using virtual accounts.
Canadian bank CIBC recently raised the fee for its $1,000 virtual savings account from $1.50 to $2.50.
The change was prompted by an increase in the cost of virtual currency, said a spokesperson for CIBC.
CIBC also said it will increase fees for customers who deposit $1 million or more from $4.50, to $5, by 2018.
The increase was made to make the fee more palatable for customers, but it’s not the end of the world, the spokesperson said.
But many customers are unhappy about the new charges, especially those who have a virtual checking or savings account, said Brian Davenport, an independent financial analyst.
“There’s been a lot of backlash, but I think this is really the beginning of the end,” said Davenports, a former Bank of Nova Scotia analyst.
He said it is not fair for customers to have to pay a fee in order to access their accounts.
Wells’ new fee comes as the U.S. Federal Reserve has announced a plan to raise interest rates on its bonds and other securities by as much as 5 per cent next year.
It will also make it more difficult for people to open an account for the first time.