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Beating the Banks on ATM Fees

By Jane Bryant Quinn
Sunday, April 28 1996; Page H02

Will you be able to beat the fee? In all states, banks and other companies that own automated teller machines now can impose a surcharge on every one of your ATM transactions. That's on top of any ATM fee you pay already -- so you might pay twice for the same transaction. The new rule took effect April 1.

Previously, surcharges were legal in only 15 states. Savvy customers there ducked the fees by using guerrilla tactics, which people in the other states should copy. If you're not careful, you could easily pay $2 or more to withdraw $20 from an ATM.

There are now three possible levels of ATM fees:

A fee charged by your own bank, at its own ATMs. Some banks charge all comers; some charge only those with certain types of checking accounts or only for transactions over a certain number; some charge zero.

A "foreign" fee, charged if you access your account through an ATM owned by a different bank.

The new surcharge -- formerly levied in 15 states and now looming over bank customers everywhere. Unlike the other ATM fees, which go to the banks, the ATM networks and whoever owns the ATM, the surcharge belongs entirely to the ATM owner. That's usually a bank but also can be a company in the cash-dispensing business.

Banks probably won't impose surcharges on their own customers. Only non-customers will pay. But check it out, says Janice Shields of the Center for Study of Responsive Law in Washington. All customers will pay at ATMs not owned by banks.

ATM surcharges used to be banned by the national ATM networks -- Cirrus, run by MasterCard, and Plus, run by Visa -- as well as by several regional networks, except in the 15 states that allowed them by law.

But banks are hungry for higher fees and a surcharge is pure profit. Under pressure from their members, Cirrus and Plus relented and most of the regional holdouts quickly followed.

When a surcharge is introduced, ATM use drops but soon picks up again, says Patricia A. Murphy, an editor at the trade paper Bank Technology News. The new fees will make it profitable to put ATMs in many more places. You'll find them increasingly in such off-bank locations as department stores, malls, ballparks, train platforms, airports and resorts.

The typical surcharge today is $1, Bank Network News has found, although the range is around 50 cents to $3. Fees get especially high where there's no competition (the bank-owned ATMs on Carnival Cruise Lines charge $5) or where the hunger for cash is huge, such as in gambling casinos.

Some ATM owners won't levy surcharges at all -- at least, not at first, while consumer groups are in full cry. In big cities, competition may hold down the charge.

ATMs that levy surcharges should display a sign that discloses the cost, Susan Forman of Visa told my associate, Kate O'Brien Ahlers. When you start a transaction, the screen also should disclose the charge and give you a chance to cancel without penalty. But you won't be told that this charge comes on top of any other ATM fees your bank might charge.

Here are some ways to beat the system:

Use only your bank's own ATMs. Banks normally won't levy surcharges on their own customers. Don't assume, however, that the bank with the widest ATM network is best for you, even though it helps avoid the surcharge. Big banks often charge high fees for everything. It may be cheaper, overall, to choose a small bank or credit union, even if that means paying some surcharges to use ATMs of other banks.

Use ATMs less often, to avoid multiple charges. Instead of getting $30 three times a week, get $90 once.

Use cash less. Put more purchases on your credit card and pay off the bill at the end of the month. Or make purchases with a Visa or MasterCard debit card, which is accepted by all the same merchants who take the credit card. There may be a fee for your debit card transaction, but not an ATM surcharge.

Get cash somewhere other than at an ATM -- for example, at a grocery store, gas station or convenience store that lets you pay with your regular ATM card. You insert your card in a terminal and punch in your identification number. Often a store will let you take more cash than the cost of your purchase, and give you the difference.

Consider traveler's checks, from banks that provide them free. They'll be cheaper than using ATMs when you travel within the United States. The new surcharge doesn't apply abroad.

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