Survey Finds Rising ATM Fees
March 30, 2001 -- If you bank with one of the behemoths of the financial services industry, there's a good chance you'll pay about $3 for using another bank's automated teller machine, according to a consumers group.
That's up from about $1 four years ago, with most of the increase due to the introduction of surcharges the banks assess non-customers for using their ATMs, said Ed Mierzwinski of the U.S. Public Interest Group.
The nonprofit organization this month surveyed banks in 25 states and found that consumers pay an average of $2.86 in fees at ATMs not owned by their banks, compared to $1.01 in 1996, the year ATM surcharges were introduced in most states.
The surcharges are in addition to the so-called foreign fees that most banks charge their own customers for using an ATM owned by another financial institution, Mierzwinski said.
"Not only is ATM surcharging unfair to consumers, since it is charging them twice for one transaction, it is also anticompetitive, since it encourages consumers to switch their accounts to bigger, higher-fee banks, ultimately limiting consumer choice," the group said in a statement accompanying the report.
‘Be Careful What You Wish For’
A bank industry representative took issue with the allegations of anticompetitiveness. "Fees subsidize the ability of a bank to place a machine in a certain location for use of their customers," said John Hall of the American Bankers Association. "It's all about choice and convenience."
Hall said consumers who don't want to pay the surcharge have the option of using ATMs owned by their own banks. He added that since 1996 banks have factored the ability to collect surcharges into their decisions on where to locate ATMs.
"They should be careful what they wish for," Hall said of the consumers group. "If you ban fees [banks would] shut down many ATMs and you'd have less choice and less convenience."
Consumer organizations in 1999 sponsored bans on extra ATM fees in San Francisco and Santa Monica, Calif., but the bans were overturned on court challenges by banks.
But there is evidence that consumers are making efforts to avoid ATM surcharges, using their debit cards, for instance, to make cash-less purchases and asking for extra cash back.
Smaller Banks Join Hands
The consumer advocates found that 94 percent of all banks surveyed imposed surcharges, with the fees averaging $1.47. Foreign fees averaged $1.39.
Big banks have higher ATM fees than smaller banks, the survey found, and big banks are more likely to assess surcharges. Combined big bank ATM fees averaged $3.07, with surcharges accounting for $1.55 of the total, on average, and foreign fees contributing $1.52.
PIRG's Mierzwinski lauded the efforts by credit unions and smaller banks to create what's known as selective surcharge alliance networks.
"The small institutions are trying to avoid losing customers and get customers to switch from bigger banks to avoid surcharges," he said of the alliances in which members refrain from surcharging each other's customers but do surcharge others.
The nation's largest such alliance is based in Massachusetts and now has members in New York, Connecticut, Ohio, Rhode Island and Puerto Rico, Mierzwinski said.