Struggling Banks Are Raising Many Service Charges : Consumers: Fees for ATM transactions and savings accounts are among those hiked. Some say lower-income clients will be affected most.

The zeal of U.S. banks to cut costs during the worst crisis since the Depression has led to layoffs, pay cuts and dividend reductions for shareholders. Consumers won’t be spared, either.

Fees for automated teller machines, savings accounts and other services are rising as the industry struggles to control costs and pass on higher regulatory fees.

“We continue to get reports of the increase in fees in a number of states,” said Peg Miller, banking specialist for the Consumers Federation of America.

“It’s not a reflection of the cost of doing business. It’s a very decided business decision to raise fees,” she said, adding that low- and moderate-income customers bear a disproportionate load of the fee hikes.

Fees are rising for certain automated teller machine transactions. Interest rates for credit cards remain high despite cuts in the prime rate. Fees and minimum balance requirements for savings and checking accounts have been rising for several years.

The industry acknowledges fees are rising, part of an effort to ride out the industry’s severe downturn. Bad loans for real estate and developing countries, combined with the recession, have hurt the bottom line for many banks.

The higher fees also are the result of increased contributions to the federal bank insurance fund. A bank’s assessment rose Jan. 1 by 7.5 cents to 19.5 cents per $100 in deposits; it’s scheduled to rise again to 23 cents by the summer.

Janice Smith, the Federal Deposit Insurance Corp.’s director of consumer affairs, said she’s heard banks across the country are raising fees to pass on the higher insurance premiums “but we don’t have a lot of evidence of it.” Some consumers are calling or writing the FDIC to complain, but not in great numbers, she said.

The industry denies the fee increases are unfair.

“What is the state of the industry? Are banks making so much money that they are gouging the consumer? That’s not true,” said Marsha Sullivan, vice president of the Virginia-based Consumer Bankers Assn.

Chase Manhattan Corp. spokesman Fraser Seitel said: “We’re raising fees because this is an extremely competitive business and the services cost money to deliver.”

On April 1, Chase will raise fees on accounts with low balances. Customers who fail to keep a $1,000 minimum balance in a savings account--not linked with the bank’s combined checking-savings program--will pay $5 per month for the service.

Customers who allow Chase checking accounts to dip below minimum balances will be charged 75 cents for each cash withdrawal from an ATM machine that doesn’t belong to Chase.

Citibank raised a variety of fees on Jan. 1 for bounced checks, international money transfers and what the bank calls lesser-used services.

“We simply raised the fees to pass along the high costs,” said bank spokesman Bill Ahearn. “If you look over the past 18 months, you will see banks here and there have been raising some things.”

On April 15, Chemical Bank customers who use the Cirrus ATM network outside New York, New Jersey and Connecticut will pay $1 for cash withdrawals. Overseas, the service will cost $3 per transaction, said spokesman Ken Herz.

Customers who don’t meet checking accounts’ minimum balance requirements will see a 10-cent raise in most ATM cash withdrawal and per-check fees to 35 cents per transaction.

Other banks aren’t paying interest on the full amount deposited in certain types of accounts, such as interest-bearing checking accounts. Last November, Barnett Bank, based in Jacksonville, Fla., notified customers it would pay interest on 88% of funds held in NOW accounts, said spokesman Robert Stickler.

“We have to put 12% of those monies on reserve with the Federal Reserve,” Stickler said of the transaction accounts. “The primary reason is to establish this direct relationship on the money we can’t invest is money we won’t pay interest on.

“You’ll find there are many, many banks that are doing this,” Stickler said.