Bank ATM Fees Rose Steeply in ‘98, Fed Reports

ATM fees charged by banks and savings and loans increased significantly last year, as did the number of institutions offering free checking, the Federal Reserve said in a report to Congress released Thursday.

The central bank found substantial increases in 1998 from the previous year in overdraft charges for checks (an average increase of 90 cents, to $16.65); fees that banks charge their customers for using another bank’s automated teller machine (an increase of between 4 and 7 cents, to $1.10); and ATM surcharges, which banks charge people if they are not customers of the bank (an increase of 6 cents, to $1.20).

Fees that savings and loans charge their customers for using another institution’s ATM increased by 7 to 8 cents, to $1.05 to $1.07, while ATM surcharges rose an average of 11 cents to $1.15.

The survey found no significant increases by banks or thrifts for other kinds of fees, such as those on checking and savings accounts and for stop-payment orders on checks.

The percentage of banks and savings and loans offering free checking accounts, which do not pay interest but impose no fees, increased sharply over the year, the Fed found. Banks with free checking jumped from 3% in 1997 to 17% last year; the figure for thrifts increased from 7% to 23%.

The Fed found that in 1998, as in previous years, most of the fees charged by big banks operating in several states--including those created by mergers--were significantly higher than those levied by smaller banks.

For example, big banks charged an average of $5.21 more for stop-payment orders on checks than did smaller banks, and about $4.50 more for insufficient funds for checks and overdrafts, the report said.

The survey comes amid a wave of bank mergers, with New England powerhouses Fleet Financial Group Inc. and BankBoston Corp. the latest big institutions to announce a marriage.

Consumer advocates have criticized as excessive the fees banks charge consumers for accounts, ATMs and credit cards, and Fed Chairman Alan Greenspan has expressed concern over rising bank fees in congressional testimony.

“It’s a serious problem for consumers,” said Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group.

But Patricia Boerger, a spokeswoman for the American Bankers Assn., said that banks “continue to be a great value for consumers looking for the best combination of price, service and convenience.”