Credit Unions Hold the Line on ATM Fees, Bankrate Study Finds

Bankrate LLC’s latest study of checking account pricing at credit unions found that ATM surcharges and foreign fees haven’t changed much in the past year. 

The April study of the top 50 credit unions by deposits revealed that ATM surcharges—fees charged by ATM owners to non-customers who use their machines—actually declined 4% to an average of $2.56 versus $2.67 last year. Since 2014, surcharges have moved in a relatively narrow band with $2.46 on the low end, changes Greg McBride, chief financial analyst at New York City-based Bankrate, says aren’t statistically significant.

The average credit-union foreign fee—the charge by a financial institution to its customers for using another institution’s ATM—this year is 94 cents, up only a penny from last year and down from $1 in 2014. Some 36% of credit unions don’t charge a foreign fee at all or at least permit one out-of-network ATM withdrawal weekly, Bankrate reported Monday.

For banks, the trend in ATM fees is steadily upward, though most recent year-to-year increases have been fairly small. The average bank surcharge was $2.97 in 2017, up just over 2% from $2.90 in 2016, according to Bankrate’s most recent study of bank checking-account fees released last fall.

The average bank foreign fee was $1.72 last year, up a nickel from $1.67 in 2016, and 14 cents, or nearly 9%, higher than 2014’s average of $1.58. Among credit unions that charge a foreign fee, the most common amount today is $1.50, $1 lower than the bank average, Bankrate says.

The differences in the credit-union and bank pricing averages originate with their charters. “Credit unions are not for profit,” McBride says.

ATM surcharges still represent what McBride calls the “low-hanging fruit” of fee income, especially for banks. “Nobody’s worried about alienating a non-customer,” he says.

One fee that is rising at credit unions is for overdrafts. The average overdraft fee for check and debit card transactions rose 1.6% last year to $28.20. “The average is now at a record high this year,” says McBride. 

The average credit-union overdraft fee is still 15% lower than the bank average of $33.28, and McBride isn’t surprised about the increase.

“That’s another one where it’s kind of low-hanging fruit in terms of boosting fee income,” he says. “Even credit unions need some fee income to offset costs.”

The study also found that 82% of credit unions offer free checking, meaning an account that has no minimum balance or monthly service fee. Only 38% of banks offer free checking, Bankrate’s 2017 study found.