Survey Finds ATM and Most Other Checking Fees Growing Only Modestly in 2013

The average ATM surcharge rose 4% over the last year, but the average foreign fee fell 2.5%, according to new data from research firm Bankrate Inc. Findings from Bankrate’s latest annual survey of checking-account fees, including ATM and overdraft charges, shows overall price increases have slowed, a possible indication that banks have adjusted to regulations of a few years ago that took a bite out of their top lines.

North Palm Beach, Fla.-based Bankrate surveyed 10 banks and savings institutions in each of 25 large metropolitan areas to obtain data about 240 interest-bearing and 233 non-interest accounts for its 2013 survey. The average ATM surcharge came in at $2.60 versus $2.50 in Bankrate’s 2012 survey.

Greg McBride, senior financial analyst at Bankrate, isn’t surprised that surcharges rose for the ninth year in a row. A surcharge is the fee the ATM owner charges non-customers for using its machines, so a bank or credit union can usually raise surcharges without angering its own account holders. “It’s low-hanging fruit,” McBride tells Digital Transactions News.

In contrast, the small decline in ATM foreign fees might indicate that financial institutions are becoming more solicitous of their own customers following an 11.5% increase last year. A foreign fee is the charge a bank assesses its customers when they use somebody else’s ATM. The new survey pegs the average foreign fee at $1.53 compared with $1.57 last year and $1.41 in both 2011 and 2010.

In all, the total cost for a consumer of going outside of his or her own financial institution’s ATM network rose 2% to $4.13.

Meanwhile, overdraft fees grew for the 15th year in a row, though the increase was fairly small at 3%. The average overdraft charge is now a record $32.20 versus $31.26 in 2012. Back in 2009 the average overdraft fee was $29.58.

The modest increases in most checking-related fees this year suggests to McBride that financial institutions have largely completed the revenue-recovery strategies they implemented in the wake of the passage of the Dodd-Frank Act’s Durbin Amendment, which imposed price controls on big banks’ debit card interchange revenues in 2011. The Durbin Amendment followed changes in Regulation E by the Federal Reserve that required banks to get explicit customer approval for overdrafts, greatly reducing their overdraft fee income.

“The momentum of the increases clearly slowed in 2013,” McBride says. “The big increases in the past few years were spurred by regulation, the economics were changing by regulation.”

Bankrate also found few if any financial institutions imposing general debit card usage fees of the type that some banks quietly tested and Bank of America Corp. briefly considered in 2011 before dropping the idea in the face of massive protest. “There was certainly a lot of concern over the last couple years that debit cards might represent the new frontier for new fees or fee increases, but that has not taken hold,” says McBride. “This year fell more in line with inflation. I think that’s what we’ll see going forward.”

Some banks, however, still impose fees when customers make PIN-debit card purchases. And, to make up for revenues lost to regulations, banks have imposed various checking- account fees here and there, reducing the prevalence of free checking by half. Some 76% of checking accounts were free in 2009 but only 38% were in the latest survey, down one percentage point from 2012. “I still see plenty of free checking accounts,” says McBride.