08
NEWS
ATM fees and overdraft charges put US customers “in the poorhouse”
I
t is now 50% more expensive to use an out-of-network ATM in the US than ten years ago, according to a new survey. This fee is now a record $4.69, according to an annual survey by
Bankrate.com, up from $3.03 at the same time in 2007. This figure is the result of the surcharge imposed by the ATM owner on a non-customer, plus the fee charged by the account holder’s own bank.
According to Greg McBride, chief financial analyst at Bankrate. com, these fees are “completely avoidable”, so do not represent a major deterrent for consumers.
“Incurring five dollars in fees to withdraw 50 bucks, if it happens once or twice, is not going to put you in the poorhouse; what is going to put you in the poorhouse is sloppy habits, seeing a constant drain of avoidable fees,” he said. The steep rise in charges “gives you twice the incentive to plan ahead and make that withdrawal”.
Not for free
ATMs have been one of the sneaky channels where banks have been able to squeeze some funds, as they struggle to hit targets for returns to shareholders since the financial crisis.
Regulators have been sensitive to higher fees. In 2013, the Consumer Financial Protection Bureau started requiring banks to display information about charges on-screen or on a slip of paper before the consumer goes through with the transaction. Consumers are also encouraged to report any “confusing” experiences.
This hasn’t stopped banks, as by 1998, 68% of ATMs imposed
penalty fees on non-customers, according to Bankrate’s survey. By 2014, there wasn’t a single one that didn’t.
The Bankrate data showed that the average ATM surcharge hit a new record for the 13th year in a row this autumn, rising to $2.97 from $2.90 last year. The average fee charged by the consumer’s own bank for going outside the ATM network was up 3% to $1.72, also a new high.
The report looked at the 10 biggest banks in the top 25 main urban areas in the country to find out in which areas these charges where the highest. Pittsburgh experienced the highest average fees, with customers paying $5.19 when
Bankrate.com when combining all charges. The lowest average fees were found in Dallas, at $4.07. Many of these charges are waived by the bank if the customer has several accounts open with them.
Overdraft charges
The average overdraft fee reached a new high of $33.38, up from $33.04 in 2016. Philadelphia consumers pay the highest average overdraft fee, at $35.30. In San Francisco, average overdraft fees are the lowest of the 25 surveyed cities, at $31.44. Banks increasing that fee last year outnumbered those trimming it, by seven to one.
For the US arm of Toronto-based TD Bank, service charges on deposit accounts — including overdraft-related fees — amounted to 11% of operating revenue in the second quarter, according to data by S&P Global Market Intelligence. ATM fees at TD came to $26 million between April and June, more than US Bank and PNC Bank, which had $15 million and $16 million, respectively, and have much bigger branch networks.
www.ibsintelligence.com | © IBS Intelligence 2017
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