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Hefty Fees Come With ATM Cash

Banking: Non-customers pay more at 99% of state's machines, up from a year ago.


When Californians dart to the nearest automated teller machine for some quick cash, they're more likely than ever to pay a hefty fee, a nonprofit consumer group said Thursday.

Banks that own 99% of the ATMs throughout the state now impose surcharges for users who do not have an account with them, up substantially from a year ago, the California Public Interest Research Group found in its annual survey.

The banks also are charging more for each transaction, the group said.

Indeed, banks nationwide will haul in $2.1 billion in revenue from surcharges this year, the group estimated.

"We agree people should pay for convenience--but not that much," said Jon Golinger, the California group's consumer program director. "Most of these transactions cost the banks involved about 70 cents. The rest is gravy."

In California, more than 85% of the 30 banks surveyed impose surcharges on ATM users without accounts with them, up from 54% a year ago, CalPIRG found. Those banks operate 99% of the state's ATMs.

Banks also are charging 6 cents more, on average, than they did in 1998, boosting the fees at some ATMs to as much as $3.50 per transaction, the study found. Californians pay about 10 cents more per use than the national average, based on surveys of 336 banks in 23 states by the California group's national affiliate.

Consumers face a financial form of double jeopardy when they use ATMs owned by banks where they do not hold accounts. Their banks charge them a penalty, an average of $1.40, the study found. Then the bank that owns the ATM tacks on an average of $1.47.

"What a rip-off," said Armand Sardi of San Clemente as he drew cash without charge from an ATM at his bank, Bank of America, in Anaheim. "They use my money to make millions of dollars. That's the way you treat customers?"

Bank officials say the fees offset the expense of enlarging ATM networks, paying to place the cash-spewing gadgets in theaters, hospitals, sports arenas and other lower-volume locations.

Though automation has allowed banks to employ 10% fewer tellers than they did 10 years ago, ATMs cost $20,000 to $40,000 apiece to purchase and about $20,000 a year to maintain, said John Hall, spokesman for the American Bankers Assn.

Since banks began imposing fees on non-customers in 1996, the number of ATMs operated nationwide by banks and other providers has grown by 50%, said Greg Wilhelm, senior vice president of the California Bankers Assn.

Bankers also say consumers have multiple options for avoiding the fees, from using their own banks' ATMs to cashing checks at grocery stores.

"If you're paying a lot of fees on ATMs, you should examine your banking habits," Wells Fargo & Co. spokeswoman Kathleen Shilkret said.

Consumers are smarter than their advocates seem to think, Hall said. A survey commissioned last year by his association showed that most customers pay $3 or less per month in bank fees.

"PIRG underestimates consumers' willingness to shop around," Hall said. Comparison shopping has its limits, however. All of California's largest banks charge ATM fees. Bank of America, the leader with 4,088 ATMs statewide, and Wells Fargo, second with 3,100 ATMs, charge non-account holders $1.50 per transaction to use their ATMs.

On Thursday, the California consumer group accused the banking giants of using the sting of ATM fees to lure customers from smaller competitors.

"When [non-account holders] use some Wells Fargo ATMs, an ad pops up saying they wouldn't be paying the fee if they had a Wells Fargo account," Golinger said.

Shilkret acknowledged the marketing approach.

"Banks are competitive with one another and having a large ATM network is a competitive advantage," she said.

The few holdouts who do not charge ATM fees are all small fries: Bank of the Orient, Pacific Bank, Redwood Bank and San Diego National Bank. None has more than a baker's dozen ATMs in California.

An alliance of banks and credit unions had agreed not to impose fees on non-account holders, but it collapsed late last year after Union Bank, its biggest member, dropped out. Glendale Federal, which has since merged with California Federal, and Sanwa Bank soon followed.

"We would have preferred that all banks not impose the surcharge, but when all the big banks began to do it, we just felt we couldn't subsidize the non-customers while our competitors were bringing in fee money," said Keith Karpe, Sanwa's vice president of corporate communications.

Sanwa now charges $1.50 each time a person without an account uses its 107 California ATMs.

With surcharges increasingly becoming the industry norm, the California consumer group is lobbying for the state Legislature to stop the practice.

In Connecticut and Iowa, state banking commissioners have barred fees on transactions by non-account holders.

CalPIRG's efforts to get San Francisco's Board of Supervisors to do the same failed earlier this year, but legislators are considering a bill that would ban the charges statewide.


Fee Free-for-All

Eighty-seven percent of California banks charge non-account holders to use their automated teller machines. That's up from only 15% four years ago. Most banks also charge account holders for using ATMs owned by other banks. Here's what the 10 banks with the most ATMs charge in fees. California average based on 30 banks. U.S. average based on 336 banks in 23 states.


Calif. Noncustomer Customer fee Institution ATMs fee on other banks' ATMs Bank of America 4,088 $1.50 $2.00 Wells Fargo 3,100 $1.50 $2.00 Union Bank 600 $1.50 $1.25 Washington Mutual 381 $1.50 $2.00 Home Savings 375 $1.50 $2.00 California Federal 352 $1.50 $1.50 Citibank 170 $1.50 $1.50 Bank of the West 108 $1.50 $1.50 Sanwa Bank 107 $1.50 $1.00 Calif. Bank & Trust 71 $1.25 $1.25 California average $1.47 $1.40 U.S. average $1.37 $1.20


Source: California Public Interest Research Group

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