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Bank, ATM Fees Continue To Rise

By Martin H. Bosworth
ConsumerAffairs.com

November 3, 2006

Bank Fees • Despite Rules Changes, Banks Still Depend On Overdraft Fees • Overdraft Fees Exploding, Study Finds • Free Checking Isn't Always Free • Do You Really Need A Bank? • Fees For Unauthorized Overdraft Loans Keep Going Up • Lawmakers Target Bank Overdraft Fees • Consumers Want Opt-In Choice on Overdraft Coverage • Checking Account Fees Set Records in 2008 • Bank Fees Rise, Disclosure Sinks • Bank of America Takes Bigger Bite with $3 ATM Fee • Bank, ATM Fees Continue To Rise • Penalty Fees, Interest Rate Hikes, and Misleading Contracts Await Credit Card Shoppers • We're Paying More Than Ever at the ATM

If you're noticing extra money being drained from your account every time you use an ATM, it's not an illusion. The fees banks charge for using ATMs, and for many other commonplace transactions, are indeed on the rise.

Bankrate.com released its "Fall Checking Account Pricing Study" on Oct. 30th. The principal findings of the study included a spike in ATM fees to an average of $1.64 per transaction, an increase from $1.60 in the spring of 2006, and $1.54 in fall 2005.

Fees for bounced checks, or what the industry calls "non-sufficient funds (NSF)," also hit an all-time high. Bouncing a check can cost a customer an average of $27.40 per failed transaction, an increase of 36 cents from the survey conducted in the spring of 2006.

Bouncing more than a few checks can not only get a customer's bank account closed, but they can be reported to the ChexSystems database clearinghouse for NSF activity.

Once a customer is reported to ChexSystems, it becomes nearly impossible to open new credit or bank accounts, and it takes as long as five years to remove oneself from the database.

The news is grim even if you're not wasting money with bank fees. The average balance required to maintain an interest-bearing checking account rose to $2,600, but the actual interest earned averaged only 0.34 percent a year.

Big Bucks

Banks are making huge money off fees, with profits expected to top $55 billion this year alone.

Although banks are imposing fees on all manner of transactions, the largest slice of the pie still comes from credit card fees, which provided banks $24 billion in income this year alone.

Part of banks' increasing reliance on punitive fees comes from the slowdown in investing that has been accompanying the steady hike in interest lending rates.

As consumers and homeowners grow more gun-shy about taking out expensive new loans, banks lose money and need to recoup.

The Government Accountability Office (GAO) recently published a study that found punitive fees for credit cards were at an all-time high, and the disclosures explaining them to consumers were often poorly written and hard to decipher.

What You Can Do

Whether it's getting jerked with surprise credit card fees or just watching your money be siphoned away through ATM surcharges, you have options on how to get the most bang for your buck.

• Shop for a better deal. Banks are frantically pursuing new customers, and even the most cursory Internet search can yield comparisons on what checking account lets you keep the most of your money. Negotiate with your bank to see if they'll cut you a deal, and don't hesitate to take another bank's offer if yours isn't willing to keep your business.

• Consider credit unions. Credit unions generally offer better banking terms, including low or no ATM surcharges, reimbursement for ATM fees outside your network, better lending rates for credit cards, and higher rates for interest-bearing accounts. The National Credit Union Association can help you find a credit union you're qualified to join.

• Make your money grow. Rather than waste money with an expensive interest checking account, set up a simple free checking account and divert your extra money to a high-yield savings account or money market account. Many banks will find ways to charge users of free checking accounts for check images or online bill paying, so research carefully to avoid any pitfalls.

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