At a time when banks are reducing overdraft fees, and President Biden pledges to do so Crack down on hidden “junk” feesDreadful ATM surcharges have never been higher.
Americans who use “out-of-network” ATMs. Pay $4.73 in feesOn average, according to a study by personal finance site Bankrate.
As other routine bank fees trend down, ATM fees are increasing. The average ATM customer paid $1.97 for the service in 1998, Bankrate reports. The average rose to $3.74 in 2010 and $4.52 in 2015.
Banks generally allow free use of their ATMs. Banking experts say they may benefit from out-of-network fees to make up for lost revenue from other sources.
“I think there’s kind of a Whac-A-Mole nature to banking fees,” he said. Ted Rossman, a senior industry analyst at Bankrate. “If one goes down, something else will go up. And ATM fees are the lever they pull.”
Bankrate’s annual survey is based on data from banks and thrifts in 25 large U.S. markets.
Biden administration cracks down on ‘undesirable’ fees.
Overdraft and insufficient funds fees It decreased by almost half Since before the pandemic in 2019, according to a report by the federal Consumer Financial Protection Bureau, or CFPB. Banks collected $1.6 billion in overdraft fees and insufficient financing fees in the fourth quarter of 2022, compared to $3.1 billion in the same period in 2019.
Many large banks Voluntarily reduce or eliminate overdraft fees In 2021 and 2022, under pressure from lawmakers and regulators.
This doesn’t mean that overdraft fees are extinct.
“Our survey found that 91% of banks still charge overdraft fees in some cases,” Rossman said.
Average overdraft fees peaked at $33.58 in 2021, according to Bankrate data. It drops to $26.61 in 2023.
Analysts say these $30 and $35 fees were difficult for banks to justify and unjustifiably burdened those living paycheck to paycheck. Not surprisingly, the fees were not very popular with customers.
This month the Biden administration Launched a new crackdown on “unwanted” fees, Proposing new rules to prevent hidden fees. The FTC will require companies it regulates to be upfront about the full price of concert and sports tickets, hotel rooms, apartment rentals and cars.
The Biden administration also warned banks against charging fees for basic services, such as checking account balance.
ATM fees anger bank customers: but who’s to blame?
No account holder likes ATM fees. But customers may find it difficult to assign blame.
ATM fees are a one-two punch. One fee comes from anyone who owns an ATM: a bank that’s not yours, a cash-only restaurant in Detroit, or a bodega in Brooklyn. Bankrate found that the average fee is $3.15.
ATM surcharges are generally specified in advance. An ATM customer may be angry about paying the amount, but it would be irrational to direct this anger at his bank.
The second fee comes from your bank, ostensibly for the service of dispensing cash through someone else’s ATM. The average out-of-network fee is $1.58.
Customers may not be aware of the second charge unless they pay close attention to their transaction records. Out-of-network fees are unlikely to appear on the ATM screen.
As a consumer oversight issue, out-of-network fees “are a tough fee,” she said Elizabeth Renter, a data journalist at NerdWallet. “On a superficial level, I don’t think they should [charge it]Because you are their client.”
In total, ATM fees can add up to about $5.
A 2019 survey by MagnifyMoney, another personal finance site, found that Americans Consumers hate ATM fees More than overdraft fees, credit card annual fees, airline baggage fees, or late payment fees.
In this survey, a large majority of respondents said they would drive miles to avoid ATM fees. The MagnifyMoney survey reached a representative group of 1,028 Americans.
The solution to ATM fees: Find a bank that doesn’t charge them. Unfortunately, it’s difficult to shop at a bank to compare those fees.
“It’s difficult to make comprehensive comparisons, because many of the key details are buried in the fine print of how surcharges are charged, such as ATM fees,” he said. Chuck BellProgram Director at Consumer Reports.
Fortunately, banking customers who want to avoid ATM fees have options.
Avoid ATM fees by getting cash back at the grocery store
Many supermarkets, pharmacies and other businesses will distribute cash, without a fee, to customers who make in-store purchases using debit cards.
“I always get money from Publix,” Renter said. “When you grocery shop, maybe once a week, you also take cash,” which is enough to cover the week.
Avoid ATM fees by staying within your bank’s network
Many banks belong to extensive ATM networks and partnerships that allow fee-free withdrawals from ATMs that are not owned by the bank.
For example, Capital One advertises this to clients Funds may be withdrawn without fees Through the MoneyPass and Allpoint networks, including machines in some Target, Walgreens and CVS stores.
“Sometimes it’s helpful to call your bank and see what your options are,” Renter said.
Recover your ATM expenses using an online bank
Many online banks, with little or no physical presence, will refund ATM fees charged by others.
USAA, for example, does not charge any fees or offers at ATMs Discounts up to $10 per month For fees charged by ATM owners.
More about bank fees: President Biden is looking to get rid of “junk fees” in a new rule aimed at protecting consumers
“If you’re the type of person who travels a lot, consider working with someone who offsets some or all of those costs,” Rossman said.
If you have to use an out-of-network ATM, withdraw more cash
A $5 fee on a $20 ATM withdrawal equates to an additional 25% fee: a very steep fee.
Consider withdrawing more money to lower your effective surcharge rate and put more money in your pocket. As an additional fee on a $200 ATM withdrawal, the same $5 fee shrinks to 2.5%.
This article originally appeared on USA TODAY: Despite Biden’s “unwanted” fee campaign, ATM fees are higher than ever
