OTHER ATM FEES - FEES TO CHECK ACCOUNT INFORMATION AT FOREIGN ATMs AND ATM CARD REPLACEMENT FEES

This year's survey also includes some of the other ATM fees banks impose on their customers. These fees, which include fees to check account information at another bank's ATM and fees to replace ATM cards if they are lost, stolen or ruined can add up over the course of the year especially for low-income bank customers.

Revenue from ATM surcharges, foreign ATM fees to withdrawal money and to check account information, ATM card replacement fees and debit card fees comprise a major part of the big banks' three-part strategy to boost fee income. Big banks are:

(1) Increasing existing fees: PIRG's more detailed 1997 and 1999 and 2001 Big Banks, Bigger Fees reports, which include checking and savings and incidental fees as well as ATM fees, have identified a growing gap between fees charged by big and small banks. The results are paralleled by the Federal Reserve, which has found that multi-state (big) banks charge "significantly higher" fees than locally owned banks. [Federal Reserve Board Annual Report To The Congress on Fees and Services of Depository Institutions, June 1997, June 1998, June 1999, June 2000.] In testimony to the House Banking Committee, Federal Reserve Board Chairman Alan Greenspan reported he was "troubled" by rising bank fees. [11 Feb 1999, in answer to question from member.]

(2) Inventing new fees: Human teller fees, deposit-item-returned fees (charged to consumers or businesses who deposit someone else's bounced checks) and fees charged for calling computerized account computers are examples of other new fees.

(3) Making it harder for consumers to avoid fees. Making it harder to avoid fees includes, for example, changing "average" balance requirements on checking accounts to "minimum daily balance" requirements, as well as raising those minimums dramatically.

DEBIT CARD FEES

Another fee area examined in this year's survey was debit card/point of sale fees. Banks have been heavily promoting debit cards to replace regular ATM cards in recent years. A recent promotion by Citibank offers customers the ability to earn frequent flyer miles with American Airlines with their Citibank AAdvantage Debit Card (13).

A debit card allows the customer to avoid hand-writing checks and allows a merchant to automatically deduct a purchase from a customer's checking account. Also, debit cards are issued with a Visa or MasterCard logo that allows customers to make purchases like a credit card. However, the transaction amounts are automatically deducted from the consumer's checking account.

There are two types of debit card purchases. One type is an "online" transaction. This type of transaction occurs when a customer swipes their card in a point of sale (POS) machine and are required to enter their Personal Identification Number (PIN). The second type of transaction is an "offline" transaction. This transaction is treated like a credit card transaction. The customer signs for the purchase and the amount is deducted from the customer's checking account in a day or two (14).

As with foreign ATM fees, banks receive fees for these transactions. These fees are paid by the store merchants that have either a POS machine or a credit card transaction machine. For an online transaction the bank receives a flat fee of 7.5 to 10 cents from the merchant. For an offline transaction the bank receives of up to 2% of the transaction (15).

As found in this survey, debit cards carry hidden fees. Some banks are charging customers point of sale fees if the transaction requires the customer to enter their PIN number. However, if the transaction is put through as a credit then no fee is assessed. In other cases, banks are charging customers fees if the transaction is put through as a credit as opposed to a point of sale. Also, benefits that customers may receive if they use their debit card depends on the type of sale. For example, the Citibank AAdvantage customer can only earn frequent flyer miles when the customer signs for the transaction (16).