Local News

Watch Out For Hidden ATM Fees When Withdrawing Money

Posted November 11, 1999 6:00 a.m. EST

— You need cash and head to the nearest ATM. By the time the transaction is done, that $20 withdrawal cost you about $23. Why?

Banks use fancy words like surcharges and transaction fees when you use an ATM that is not owned by your bank. But here is one charge you can bank on. Using another bank's ATM can cost you $3 or more.

One ATM user says the banks make enough money as it is.

"I feel like this is another way for them just to generate more revenue."

The question becomes who gets your money when you get this surcharge?

Let's say you have to pay $3 for using another bank's ATM. The bank that owns the ATM gets $1.50 for the privilege of using its machine. In addition, your own bank also charges you $1.50.

"It seems almost like double jeopardy," says another ATM user who does not like the way the banks can charge an extra fee.

Studies show that when someone uses another bank's ATM, it costs that customer's bank no more than 50 cents for the transaction.

David Stevens, a consumer banking manager, says the banks need to charge $1.50 to keep the ATM network running.

"There's data lines that have to be dedicated to the machine, and not just regular phone lines," Stevens said. "Then you have to pay somebody to service that machine every day, and be there should that machine go down, 24 hours a day, so it's very costly."

According to the General Accounting Office, banks make about $2 billion a year in surcharges for ATM transactions. That does not even count the money you pay your own bank for using another bank's ATM.

In the end, this "double-dipping" issue will likely end up in front of the Supreme Court.

The battle over ATM fees is heating up all across the country:

  • In Santa Monica, Calif., a new ordinance that went into effect Thursday bans surcharge fees on ATM transactions by non-account holders. A similar fee ban is scheduled to take effect in San Francisco next month.
  • Iowa and Connecticut have banned surcharges, however, Iowa's ban was overturned by the Court of Appeals.
  • Connecticut's Supreme Court is expected to rule in December on the state's right to regulate banking. That decision could spark or silence other states' efforts to do away with surcharges.
  • Three similar bills have been filed in theNorth Carolina legislatureduring the past two sessions. But none made it out of committee.

    There are some ATM tips to save you money:

  • Ask for cash back when you use your card at the grocery store. There's usually no charge.
  • When you go to the ATM, withdraw a large amount so you do not have to make repeat trips.
  • Check your statement. It is not uncommon to find a mistaken fee.