Big Banks Lead Way In Imposing New ATM Card Annual Rental Fee
Five
years after ATM owners began imposing ATM surcharges on non-customers,
a new national survey finds that the cost of using another bank's ATM
machine has nearly tripled, from $1.01 before surcharging to $2.86
today.
The
new U.S. Public Interest Research Group survey finds that while in 1996
consumers paid only a single "foreign" ATM fee to their own bank,
averaging $1.01, to use another bank's ATM, they now pay both that
foreign fee plus the new surcharge that, combined, average $2.86 in
2001. The survey also found that the nation's biggest banks charge the
highest combined ATM transaction fees and are leading the way in
charging a new annual ATM card "rental" fee.
"Double-dipping
ATM surcharges now mean triple costs for consumers, " said Ed
Mierzwinski, consumer program director for U.S. PIRG. "Charging
consumers twice to use the ATM only once is worse than an April Fool's
joke, it's part of a calculated bank strategy to boost profits: Raise
fees, invent new fees, and make it harder for consumers to avoid fees."
On April 1, 1996, the two largest ATM networks, VISA's Plus and
Mastercard's Cirrus, ended their prohibition against member banks
surcharging non-customers using their ATMs. The ATM owner keeps the
entire surcharge and receives a portion of the "foreign" ATM fee nearly
all banks had previously and continue to charge their own
accountholders who use other owner's ATMs.
"In
addition to charging the biggest ATM surcharges and the biggest foreign
fees, big banks are leading the way in charging a new annual ATM card
rental fee, too," added Mierzwinski. "We will continue to support
efforts by states and cities to ban ATM surcharges, so that consumers
can get some relief from these unfair fees."
The
report is the fifth state PIRG surcharge survey since April 1996. It
compares ATM surcharges and other ATM fees at 376 banks and credit
unions in 25 states and the District of Columbia. Among the key
findings of "Double ATM Fees, Triple Trouble" are the following:
Nationally, 94% of all banks surveyed imposed surcharges averaging $1.47. Average foreign fees were $1.39.
Nationally,
big banks had higher ATM fees in 2001 than locally-owned smaller banks
and more big banks surcharged. Combined big bank ATM fees averaged
$3.07. Nationally, 97% of big banks charged surcharges averaging $1.55.
Big bank foreign fees averaged $1.52.
The
report also documented that some banks are now charging consumers an
annual ATM card fee. Eighteen percent of all banks imposed annual card
rental fees averaging $13.76 on either ATM card or ATM debit card
holders or both. Twice as many big banks (24%) as small banks (12%)
imposed the annual card rental fee. "Charging us twice to use the ATM
only once isn't enough," added Mierzwinski, "Now the banks want to rent
us our ATM cards as well."
Despite
the increase in the number of ATMs surcharging, some positive signs
exist. Several cities, led by San Francisco and Santa Monica, have
banned ATM surcharging, although those bans have been blocked pending
an ongoing appeal. Iowa continues to enforce its ban on surcharging.
Other cities, including New York and Chicago, are considering bans, but
until the California appeal has been decided, the banks' lawsuits will
continue to have a chilling effect on surcharge ban efforts,
Mierzwinski noted.
In
addition, several networks and alliances of small banks and credit
unions, notably the New England SUM Program, are aggressively marketing
their own "no-surcharge" and "selective surcharge" policies. The New
England based SUM alliance of several hundred community banks with over
1700 ATMs now has members in New York, Ohio and Puerto Rico. Similar
alliances include the Pennsylvania Freedom Alliance and the Louisiana
area Community Cash Network. Members of these alliances do not
surcharge each others' customers, but do surcharge big bank
accountholders using their machines. Until the U.S. Department of
Justice intervened in 1999, development of these selective surcharge
networks had been blocked by unfair membership rules of ATM networks,
Mierzwinski noted.
"Despite
the recent growth of the No-Surcharge and Selective Surcharge
Alliances, U.S. PIRG will continue to support local and statewide
efforts to ban ATM surcharges," added Mierzwinski. "Surcharges are
unfair and lead to the growth of bigger banks, which even the Federal
Reserve has documented charge the highest fees." He noted that
California PIRG had led efforts to ban surcharges in Santa Monica and
San Francisco and is actively supporting the cities' appeal to the U.S.
9th Circuit Court of Appeals, which will be decided later this year.
Mierzwinski
also released copies of a comment letter U.S. PIRG is sending to the
Office of the Comptroller of the Currency (OCC) in response to a
proposed regulation change designed to undercut the California cities'
appeal. "The OCC has a long history of preempting state low-cost
lifeline banking laws and ATM surcharge bans, even when Congress tells
it not to do so," Mierzwinski said. "This rule change proposal is
nothing more than an unjustifiable litigation ploy in defiance of
Congress that's part of OCC's ongoing efforts to help big banks ignore
strong state consumer protection laws."
"We
urge consumers to avoid surcharging, fee-gouging ATMs," Mierzwinski
said. " Use your own ATM when possible, otherwise use ATMs with "No
Surcharge Alliance" signs. Shop around when choosing a bank. Join
member-owned credit unions or open accounts at small banks. Small banks
and credit unions consistently charge consumers lower rates on most
fees and accounts than big banks. We urge Congress to enact strong laws
requiring banks to offer low-cost accounts and banning surcharges and
other unfair bank fees," he concluded.
