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In its latest report, the Public Interest Research Group says more banks are charging customers annual fees for ATM/debit cards. An ATMmarketplace phone survey of 10 big banks, however, found that most did not.
May 8, 2001
Paying rent to live in an apartment is expected. But paying "rent" to have an ATM/debit card?
Almost one-fifth of all banks charge their customers an annual fee for the privilege of having an ATM card, a debit card or one that acts as both, according to a report released by thePublic Interest Research Groupin April.
In the report,"Double ATM Fees, Triple Trouble: A Fifth PIRG National Survey of ATM Surcharging Rates April 1, 2001 -- The Fifth Anniversary of ATM Surcharging,"PIRG states that 18 percent of banks impose an annual ATM/debit card fee on customers.
Almost one-fourth of the "big banks" (categorized by PIRG as the 300 largest banks nationwide that control nearly two-thirds of all deposits) charge an annual fee to card holders, while 12 percent of small banks assess such a fee, according to the report. The average fee assessed by all banks is $13.76. $14.14 for big banks and $12.91 for small banks.
These percentages are higher than when PIRG conducted similar research in the past, said Elizabeth Hitchcock, PIRG¹s communication director. The fees are being seen in "appreciable numbers" and "in earnest this year," she said, although she did not provide information from previous studies or names of banks charging the fees.
According to the PIRG report, the inception of these annual fees is part of a three-pronged strategy by banks to increase their fee income: banks are increasing existing fees, adding new ones and making it harder for consumers to avoid them.
Les Riedl, senior vice president ofSpeer & Associates Inc.,an Atlanta-based financial services consulting firm, agreed that banks do use the fees to increase revenue.
"Banks have been charging fees ever since debit cards were introduced. PIN-only cards have been around over 30 years; check cards took off in the early 1990s," he said. "However, most of the attention on fees has been in the last five years, as banks increasingly imposed fees and focused on fee income to grow revenues."
ATMmarketplace contacted 10 of the nation's largest banks, and found that seven of them (Bank of America, Fifth Third, Citibank, PNC, Bank One, Huntington Bank and Chase Manhattan) do not charge annual fees to their customers for ATM/debit cards.
Stan Lata, vice president of media relations forBank One, said Bank One doesn¹t charge ATM/debit card annual fees because Bank One wants to encourage customers to do their banking via channels other than the teller, including the telephone, Internet and ATM.
Three banks contacted by ATMmarketplace do assess some type of fee for the cards.
U.S. Bankhas one ATM/debit product with an annual fee, said Patricia Wesner, the bank's executive vice president. The new check card, which accrues frequent flyer miles for Northwest Airlines when it is used, carries an annual fee of $20 per year.
First Unionhas charged a $1.50 monthly fee since 1994 for customers with a "very basic" checking account to have an ATM/debit card, said First Union spokesman Don Vecchiarello. This is the only type of annual ATM fee First Union assesses, he said.
Wells Fargo, which has banks in 23 states, charges a $15 annual fee in Iowa for all ATM cards and a $10 annual fee in Colorado for one type of account, said Susan Stanley, manager of public relations for the bank¹s business banking group. Wells Fargo charges no other annual fees to ATM/debit card holders in any other states, she said.
John Hall, senior manager of public relations for theAmerican Bankers Associationin Washington D.C., said that simply because banks list an ATM/debit annual fee on a menu of fees "doesn't mean people are always paying them."
Such annual fees may be assessed only on certain accounts, or they may be waived if a customer maintains a minimum balance or has direct deposit, Hall said.
Riedl agreed that banks often waive fees for their better customers. "As a generalization, about 30 percent of customers at a bank typically pay most of the fees," he said.
As to whether customers can expect to see ATM/debit annual fees appearing at more banks, Hall said that's up to them. "Consumers will determine whether it will become a trend. Ultimately, (they) are in the driver's seat."
Riedl predicted that more banks will implement fees as debit card usage grows. He doesn't believe that most customers will resist if they believe they are getting value for their money.
"You will see more banks looking at some sort of fee as card usage continues to increase and customers are provided with greater value," he said. "Customers have shown that card demand and usage is price inelastic. they like the convenience of debit cards and will pay a reasonable fees and surcharges for the convenience."
PIRG plans to conduct additional research on the issue for its pending 2001 update to the 1999 "Bigger Banks, Bigger Fees" report.
