Record ATM Fees Could Be Impacting Checking Balances

Automated Teller Machines (ATM) fees have hit a record high according to Bankrate.com’s latest survey of large banks and thrifts. The fees are leaving many balances short despite rising interest rates.

The key findings of the semi-annual survey, which compares checking accounts and ATM fees offered by large banks and thrifts in the 25 largest markets with a sampling of checking accounts available at online banks, include:

  • The fee for using the “wrong” ATM – one owned by a bank other than the bank issuing the ATM card – hit an all-time record high. Consumers get hit twice for such withdrawals, by the other bank’s ATM fee and by their own bank’s fees, for a total average fee of $2.91.

  • Bankrate.com estimates that American consumers will pay more that $4.3 billion in withdrawal fees for using ATMs not owned by their own bank in 2005.

  • Bounced check fees have become sneakier. The average insufficient funds fee actually fell a few cents to $26.90 from $27.13, however, it remains the second-highest fee recorded since 1998 when Bankrate.com began surveying checking accounts. To offset the lower fee, more banks have instituted tiered fees that ramp up the more checks that bounce or are left uncovered.

  • Interest-bearing checking accounts remain an unattractive option, with consumers paying more to open an account and locking up a lot more money just to gain a pittance of interest.

So how can consumers prevent these record fees from siphoning off their balances? The obvious first step is to manage ATM withdrawals so that they are only made at ATMs belonging to the bank that issued the card and holds the account. Some banks, especially smaller banks, may also belong to surcharge-free alliances and offer free access to thousands of ATMs across the country. Other banks have chosen to reimburse accountholders for fees incurred when using another bank’s ATM. Unfortunately, at some banks this perk may only be available to higher balance customers.

Withdrawals may not be the only place funds may be leaking from consumer accounts. Debit cards can also be used for point-of-sale purchases. Consumers will need to ascertain whether their bank assesses point-of-sale fees for certain debit transactions, such as entering a Personal Identification Number (PIN), rather than doing a signature-based transaction. The gray area is cash back transactions, where the point-of-sale transaction fee is typically lower than the fee for using an ATM from another bank. Even with the lower fee, it is important for consumer to keep track of such transactions.

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