Beating ATMs' higher user fees

Staying Ahead

April 29, 1996|By JANE BRYANT QUINN

NEW YORK -- Will you be able to beat the fee? In all states, the banks and other companies that own ATMs can now impose a surcharge on every one of your ATM transactions. That's on top of any ATM fee you pay already -- so you might pay twice for the same transaction. The new rule took effect April 1.

Previously, surcharges were legal in only 15 states. Savvy customers there use guerrilla tactics to duck the fees, which people in the other states should copy. If you're not careful, you could easily pay $2 or more to withdraw $20 from an ATM.

There are now three possible levels of ATM fees:

1. A fee charged by your own bank, at its own ATMs. Some banks charge all comers; some charge only those with certain types of checking accounts or only for transactions over a certain number; some charge zero.

2. A "foreign" fee, charged if you access your account through an ATM owned by a different bank.

3. The new surcharge -- formerly levied in 15 states and now looming over bank customers everywhere. Unlike the other ATM fees, which go to the banks, the ATM networks and whoever owns the ATM, the surcharge belongs entirely to the ATM owner. That's usually a bank but can also be a company in the cash-dispensing business.

Banks probably won't surcharge their own customers. All customers will pay at ATMs not owned by banks.

ATM surcharges used to be banned by the national ATM networks -- Cirrus (run by MasterCard) and Plus (run by Visa) -- as well as by several regional networks, except in the 15 states that allowed them by law.

But banks are hungry for higher fees, and a surcharge is pure profit. Under pressure from their members, Cirrus and Plus relented and most of the regional holdouts quickly followed.

When a surcharge is introduced, ATM usage drops but soon picks up again, says Patricia A. Murphy, an editor at Bank Technology News. The new fees will make it profitable to put ATMs in many more places. You'll find them increasingly in such off-bank locations as department stores, malls, ballparks, train zTC platforms, airports and resorts.

The typical surcharge today is $1, the trade paper, Bank Network News, has found, although the range is around 50 cents to $3. Fees get especially high where there's no competition (the bank-owned ATMs on Carnival Cruise Lines charge $5) or where the hunger for cash is huge (casinos).

Some ATM owners won't levy surcharges at all -- at least, not at first, while consumer groups are in full cry. In big cities, competition may hold down the charge.

ATMs that levy surcharges should display a sign that discloses the cost, said Susan Forman of Visa.

To beat the system:

Use only your bank's ATMs. Banks normally won't levy surcharges on their own customers.

Use ATMs less to minimize charges. Instead of getting $30 three times a week, get $90 once.

Use cash less. Put more purchases on your credit card and pay off the bill at the end of the month. Or make purchases with a Visa or MasterCard debit card, which is accepted by the same merchants who take credit cards.

Get cash somewhere other than at an ATM -- for example, at a grocery store, gas station or convenience store that lets you pay with your regular ATM card. You put your card in a terminal and punch in your identification number. The store often will let you "charge" more cash than the cost of your purchase, and give you the difference.

Consider travelers' checks from banks that provide them free. They're cheaper than using ATMs when traveling in the United States. The new surcharge does not apply abroad.

Write to Jane Bryant Quinn at: Newsweek, 444 Madison Ave., 18th floor, New York, N.Y. 10022.

Pub Date: 4/29/96

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