By James Limbach
ConsumerAffairs.com
December 7, 2009
Senator Charles E. Schumer (D-NY) wants a review of the major rise in ATM fees imposed by banks on customers who are simply trying to withdraw their own money.
Back in September, Bankrate, Inc. reported that bank fees hit an all-time high in 2009.
Of particular concern is the fact that the average fee that banks charge non-customers rose 12.6 percent in the last year. That's in addition to the fee that customers are charged by their own bank when they use an out-of-network ATM. That fee averages $1.32 and is assessed by 72 percent of banks.
"ATM fees are getting so onerous that the costs of accessing your money easily outweighs the convenience factor. These mounting fees demand a response from federal regulators. Consumers are bearing an unfair burden in maintaining the health of banks' balance sheets," Schumer said.
During his confirmation hearing, in early December, Federal Reserve Chairman Ben Bernanke promised Schumer that the Fed will look into the ATM fee structure.
There are steps consumers can take to keep from getting gouged by rising ATM fees:
• Find a bank that reimburses your ATM fees. Many banks offer reimbursement for fees charged when you use a non-bank ATM, but only with specific accounts or savings plans. When looking for a new bank or considering changing your account plan, make sure to investigate their ATM fee structure thoroughly and don't be afraid to ask questions about the fees they charge.
• Join a credit union. Credit unions are run by member-elected cooperatives, and depend on the financial health of their members, so they generally offer better financial terms for new accounts than banks. Most credit unions will not charge members for withdrawing money from non-credit union ATMs, or will reimburse any fees that are charged. This isn't a perfect solution, as you have to find a credit union you can qualify to join, and the credit union may require you to only use ATMs in its network, or a shared network with other credit unions, in order to avoid ATM fees. The National Credit Union Administration offers tips on how you can qualify to join a credit union, as well as a searchable database of credit unions.
• Use your credit card for your shopping needs. Paying by plastic helps you avoid losing more money to ATM fees, but it can have its own set of problems. Make sure to pay your bill in full each month to avoid penalties or interest hikes on your purchases. Consider rewards card programs that reimburse your purchases with cash deposits, or those that offer "points" you can cash in for other goods down the line. Make sure to examine any rewards card program thoroughly to avoid any hidden traps that may end up costing you more money than you earn.
• Get cash back when buying goods with your debit card. Most retailers and supermarket chains will offer you the opportunity to get cash back when making a point-of-sale debit purchase. This option is favored by Emily Davidson of Creditbloggers, as she "[hasn't] heard of a bank that charges an 'ATM fee' for this convenience -- mine certainly doesn't." You can get up to $200 in cash at most stores and you'll get the added benefit of completing two errands at once," Davidson says.
• Set a budget for yourself. The best way to avoid getting stung with ATM fees is to limit the amount of available cash you're carrying. Figure out exactly how much money you need in the course of a day or week for necessities--food, transportation, emergency purchases, and take that out from your bank at the beginning of the week, and stick to that amount. Sticking to a budget will not only help save more of your money for bigger purchases, but it will help improve your financial smarts as well.
Earlier this year, Schumer led the call for the Fed to reform overdraft fees imposed by banks when customers make purchases that exceed their remaining balance.
