Tags: ATM | GAO | surcharge | banks

GAO Report: ATM Fees Have Soared

Friday, 26 Apr 2013 07:50 AM

By Michelle Smith

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Grabbing cash from an out-of-network ATM is a convenience that is getting more expensive, the Government Accountability Office (GAO) reveals.

It is increasingly more common for a bank to allow its account holders to use any of its ATMs for free, but to charge those who hold accounts at other banks. That fee is often called an out-of-network surcharge.

In 2007, 87 percent of financial institutions had out-of-network surcharges, but that number jumped to 96 percent in 2012.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Furthermore, the surcharge for cash seekers rose 20 percent during that time.

According to the GAO, out-of-network ATM usage is a convenience that costs an average of $1.75 in 2007. As of last year, the average fee charged by banks and credit unions was $2.10.

This was based on surcharges ranging from 45 cents up to $5, clearly indicating that some people are paying well above the average.

“Foreign” fees, which are surcharges that banks impose on their own account holders for using other institutions' ATMs, have remained flat, the report shows.

Still, getting cash from ATMs can sometimes mean paying two fees. And these fees are not the only thing on the rise. Increasingly, people have started to grumble about bank fees in general. And surcharges to access one's own money are one of the charges that often ruffle consumers' feathers.

Banks and credit unions do not want ATM surcharges to cause people to view them unfavorably, says CNBC. On the contrary, for financial institutions, the hope is often that people will be motivated to open an account at institutions were they have been subjected to charges before.

Essentially, the idea is that people who regularly use an out-of-network ATM because it is along their normal route may start to calculate the costs. Then, some of those people might be motivated to establish a relationship with the institutions that own the machines where they are paying fees.

In some cases, ATMS are obviously not meant to lure new account holders because they are independently owned.

Of the estimated 420,000 ATMs in the nation, only about half are owned by financial institutions, the GAO report says.

Some of the privately owned ATMs allow people to get cash for free. But like those owned by financial institutions many require cash seekers to pay a fee.

The GAO found that the average surcharge for these machines is $2.24. The average price in this case was based on an assessment of 100 machines with fees ranging from $1.50 to $3.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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