ATM And Overdraft Fees Set Records—Again

Driven mostly by higher surcharges, average out-of-network ATM fees set a record in 2014 for the eighth straight year. Plus, the average overdraft fee, now $32.74, set a record for the 16th consecutive year, according to Bankrate Inc.’s annual study of checking-account pricing.

Total out-of-network ATM fees are up 5.3% this year to $4.35 per transaction, well above a 1.5% increase in 2013 but close to their 17-year average growth rate. Out-of-network ATM fees are comprised of surcharges, which the ATM owner charges to non-customers using its machines, and foreign fees, which a financial institution charges its customers when they withdraw cash from ATMs it doesn’t own.

Bankrate says the average surcharge is now $2.77 per transaction, up 6.5% from $2.60 last year. The most common surcharge is $3.

The average foreign fee is $1.58, up 3.3% from $1.53 in 2013. After holding at $2.00 for eight years, the most common foreign fee is now, by a wide margin, $2.50.

North Palm Beach, Fla.-based Bankrate reviewed checking-account pricing from 10 leading banks and thrift institutions in each of 25 large U.S. metropolitan areas in July and August. The research firm examined pricing for 242 interest-bearing demand-deposit accounts and 238 non-interest accounts.

Average out-of-network ATM fees are up by 23% over the past five years. A Digital Transactions analysis of Bankrate data going back to 1998 shows that out-of-network costs have increased 5.2% a year on average.

Greg McBride, chief financial analyst at Bankrate, says consumers are getting smarter about using ATMs owned by their own banks or credit unions, which rarely charge customers fees. That means financial institutions have fewer opportunities to generate ATM fees, thus driving the out-of-network price increases.

“The cost of maintaining the ATM network is amortized over fewer out-of-network transactions,” says McBride.

Every ATM-owning institution Bankrate surveyed assessed surcharges on non-customers. Surcharges have risen by an average of 7.6% a year since 1998, almost three times the 2.6% average annual increase in foreign fees. From a banker’s perspective, the disparity is unsurprising.

“Nobody is worried about alienating a non-customer,” says McBride. “The surcharge is low-hanging fruit in terms of boosting fee income.”

Bankrate’s review of overdraft fees, also known as non-sufficient funds (NSF) fees, covered charges triggered by virtually any transaction that takes the customer’s account balance below zero, including a debit card purchase, check payment, ATM withdrawal or automated clearing house transaction. The average NSF fee in 2014 is up 1.7% from $32.20 last year. Over 17 years, NSF fees have risen by 2.7% annually on average.

—Jim Daly