Banking fees multiply it's wise to shop around

Andrew Leckey

February 19, 1993|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Banks and savings and loans seem to be nickel-and-diming their customers to death.

Fees on everything from automated teller machine transactions to checking account services rose another 9 percent to $10.4 billion in 1992, a relentless advance that has continued for several years.

This makes it important to shop for a financial institution whose fee structure benefits the types of transactions your family typically makes. Fees really do vary among institutions.

Look over your monthly statement and consider your usual balances before comparing. Ask about special packages with various levels of service. Watch for fees attached to items such as receiving copies of checks and penalties for bounced checks.

If you consolidate your holdings with the right institution, it may offer you better deals as a valued customer.

It's also a good time to develop self-control. For example, if your ,, bank charges fees on ATM use, it's not smart to keep popping in day after day to make tiny withdrawals. A larger withdrawal once a week makes more sense.

NB Only one in four banks has a charge for withdrawing money from

one of its own ATMs. That fee typically ranges from 10 cents to 40 cents, according to a survey by the Atlanta-based Speer & Associates financial consulting firm.

However, more than nine out of 10 banks charge a fee for withdrawals at another bank's ATMs, those charges ranging from 50 cents to $2.

"The most popular transaction is a withdrawal, and the average cost is about a dollar when you use an ATM that doesn't belong to your bank," says Hugo Ottolenghi, editorial director for Bank Rate Monitor in North Palm Beach, Fla., a financial publication that tracks bank rates.

"ATM usage at most banks' own machines is usually free, but there are often penalties when you fail to maintain a certain minimum account balance."

Why these fees, when banks once tried to convince us that ATMs would greatly reduce bank costs?

"While consumers did fall in love with ATMs as the industry predicted, they didn't fall out of love with tellers, and banks were forced to keep both," says John Hall, a spokesman with the American Bankers Association. "So the tremendous saving that was predicted when banks brought in ATMs just didn't happen."

It isn't merely bankers who are boosting fees.

"Not only banks, but savings and loans and credit unions are starting to charge for ATM use, in order to pass through the cost of the ATM network to the consumer," says Michael Moebs, chairman of Moebs Services in Lake Bluff, Ill., an economic research firm. "After all, the cost of clearing these transactions must be borne by someone."

There are times when convenience and special services encourage you to accept a fee.

"If you have a Touch-Tone telephone, you can now phone in account inquiries and cash transfers between accounts in a process that costs as much as 30 cents a transaction," says Richard Robida, senior vice president with Speer.

"The consumer should only pay for services he wishes to use at his convenience, but, in some cases, it may be worth it to him to be able to make a payment from home at 10 p.m. at night."

Fees expand far beyond ATMs, however. For example, a checking account can have 30 to 40 different types of bank fees, Moebs notes. More than 80 percent of these fees have increased beyond the consumer price index the last several years.

"Remember that banks are far more likely to be flexible regarding their fee structure if they consider you a valued customer, rather than one who has assets spread all over town," says Moebs.

Otherwise, you're on your own.

Normally there's a monthly maintenance fee on your checking account for small depositors because it's costing the bank money to supply you with that service," says Virginia Stafford, a manager with the American Bankers Association.

"Processing, providing you with checks, reconciling your account every month and sending your statement are expensive, and banks are the largest users of first-class mail."

On June 21, thanks to the Truth-in-Savings Act, banks and S&Ls will be required to give a disclosure of every deposit service they're offering to the public. This will become "must" reading when you choose an institution.

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