Out-of-network ATM Fees, Overdraft Charges Hit Record, Survey Says

by PaymentsJournal 0

It’s costing consumers more and more to get ahold of their own money.

The average fee consumers pay to withdraw cash from an ATM outside their bank’s network is a record $4.52 per transaction, according to a new survey from Bankrate.com.

That amount is a combination of two fees, rather than one, which may come as a surprise to some consumers.

“Your bank, the majority of the time, is going to charge you,” says Greg McBride, chief financial analyst for Bankrate.com, a personal finance website. “And almost without fail the ATM owner is (also) going to charge.”

You’ll likely pay more in Atlanta, where out-of-network transactions average $5.15, and a lot less in San Francisco, where the typical fee is $3.85, the survey found.

Fees for using an out-of-network ATM have increased 21% over the past five years. That could be due in part to the fact that fewer people are using ATMs, but banks still have to pay to maintain them, says Columbia Business School Professor Patrick Bolton, who has studied banking and economics.

“There seems to be less use of ATMs, and that would almost automatically give you a higher cost,” Bolton says. “The other potential related reason is that … sometimes those fees are waived for good clients by banks. And so, if those fees are waived for some clients, they have to be paid for more by others.”

A study of 70 financial institutions commissioned by PULSE, the nation’s third-largest ATM and debit network, in the first quarter of the year found that the average debit card was used to conduct two ATM transactions per month in 2014. That was down from 3.4 ATM transactions per month in 2005 — a 41% decline.

Even though most banking customers overwhelmingly choose to use ATMs from their own financial institution (as noted in recent Mercator Advisory Group CustomerMonitor Survey results) there are times when “off-us” withdrawals will invariably occur.

And though banking customers clearly dislike such ATM fees, sometimes they feel they don’t have alternatives. FIs should be mindful of this important point, and consider their reputational risk when determining fees. Too often, the short-term satisfaction of receiving increased fee income may be more than offset by customer dissatisfaction and potential attrition down the road.

Overview by Ed O’ Brien, Director, Banking Channel Advisory Service at Mercator Advisory Group

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