As ATM addiction grows, so do banks' fees for use

June 17, 1994|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Automated teller machines were supposed to save consumers time and money.

Well, one out of two isn't bad.

Now that Americans are hooked on the ease of using this country's 87,000 ATMs for their financial needs, the fees charged by banks for use of this equipment continue to rise.

The average fee for an ATM transaction at a bank other than one's own has risen to $1, with institutions such as Bank of America charging $2. In a particular show of cheek, some banks require fees for use of their ATMs by their very own customers, with an average charge of 25 cents.

Expect fees to continue to grow.

Fight back by shopping for a financial institution whose fee structure benefits the types of transactions your family makes. Use your own bank's ATM whenever possible to avoid fees. If it charges fees, don't make tiny withdrawals day after day. A larger withdrawal once a week makes more sense. Whenever convenient, use a regular teller.

I recall the initial push for use of ATMs years ago, when banks told journalists such as myself that this would ultimately save consumers big money because less would be spent on teller salaries and building costs.

It seems to be helping the banks' bottom line. They save more than $2 billion in teller costs from ATM use annually and ultimately reap nearly $2 billion in profits, according to a study by the Consumer Federation of America (CFA). Though ATM operating costs have fallen 4 percent since 1990, fees keep rising and new ones are introduced.

"Some institutions are charging annual ATM card fees and others assessing fees on 'dormant' ATM cards to get consumers to use them more," noted Chris Lewis, CFA director of banking policy in Washington.

Banks want to institute fees without a fuss.

"More banks are adding fees to less noticeable services such as balance inquiries, which they hadn't charged before," said Gail Liberman, editor of the Bank Rate Monitor newsletter in North Palm Beach, Fla. "Charges for international ATM use are also steeper now, running $2 or more."

Services are being added to gain fees.

"At Bank of America, you can now request a statement of all your checks that have cleared, for a fee of $1," said Lauri Giesen, editor of the Chicago-based Bank Network News. "In the case of gift certificates or other items sold at some ATMs, the consumer isn't directly charged a fee, but the merchant selling the gift certificate may be charged one."

It pays to shop around, since fee structures vary. "There's no fee at all for regular transactions at our ATMs for our own customers, with a $2 fee only when our customer uses an ATM outside our network," noted Harvey Radin, a spokesman for Bank of America, which has the nation's largest ATM network with 5,500 machines.

In a recent case, the federal government took on the ATM procedures at a regional ATM network.

The Justice Department filed an antitrust suit against Electronic Payment Services Inc., operator of the MAC ATM network in six Eastern states. The suit claimed the network compelled banks to purchase data processing services and prevented member banks from connecting to competing networks. All of this served to boost the cost of consumer transactions.

"The MAC ATM network is now abiding by a consent decree in which it cannot discriminate in network access," said Daniel Hamilton, a spokesman for the U.S. Justice Department. "We found the conditions to be anti-competitive and therefore needlessly costly."

Some contend there are justifiable reasons for ATM fees and believe the CFA study inflates the financial rewards. Eighty-eight percent of banks offer free use of their own ATMs, pointed out John Hall, spokesman for the American Bankers Association. He defends higher fees charged for ATM use at banks other than one's own: "Convenience outweighs cost, particularly if you're traveling and you don't have to carry much cash or worry about traveler's checks."

In addition, ATMs aren't free to banks, said Giesen of Bank Network News.

"An ATM is expensive, costing about $30,000 to buy and $4,000 a month to maintain," she concluded. "You must have the armored car service handle the cash, and you have to maintain the machines, which can also be costly."

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