Rising bank fees can pack punch

EL PASO, Nov 10, 2008 (El Paso Times - McClatchy-Tribune Information Services via COMTEX) -- RATE | Quote | Chart | News | PowerRating -- The fees banks charge you for using an out-of-network ATM or bouncing a check are on the rise, according to Bankrate.com's annual Checking & ATM Fee Study, but consumers can fight back by shopping around and taking control of their finances.

"No surprise, bank fees continue to climb," said Greg McBride, a senior financial analyst with Bankrate.com. "Bounced check fees, ATM surcharges and monthly service fees on interest checking accounts all hit record highs" this year.

The personal-finance Web site has surveyed banks and thrifts for the fees they charge for the past 10 years.

A look at their major findings this year:

The ATM surcharge -- what an ATM owner charges non-customers -- hit $1.97, up from $1.78 last year.

The fee your own bank charges you for using a non-network ATM reached $1.46, up from $1.25 last year.

The two fees combined total an average of $3.43 per non-network ATM transaction, up from $3.03.

The average charge for the first bounced check is $28.95, up from $28.23 last year.

The monthly fee for an interest-bearing checking account is $11.97, up from $11.72 last year.

The average interest checking account only earns 0.24 percent, McBride said.

During a turbulent and uncertain economy, "every dollar counts," McBride said, so don't throw money away.

With the average out-of-network ATM withdrawal costing $3.43, if you make just one of these transactions per week, that can add up to nearly $180 over the course of a

year.

"Even though bank fees continue to head higher, it's important to realize that consumers aren't hostage to those fees," McBride said. "Bank fees can be avoided with a little bit of effort and discipline."

Eastsider Ismael Vela said with the economy as tight as it is, it's especially important to plan ahead and avoid ATM fees. He tries to use his credit union's ATMs or those that his credit union has an arrangement with.

"At $2 or $3 each time, it's ridiculous; it adds up big-time," Vela said of out-of-network transactions. "You can't be throwing money away at the ATM." John Heasley, executive vice president of the Texas Bankers Association, said ATM and bounced-check fees are "simply charging (consumers) for services rendered."

"A wise consumer can avoid those fees by knowing your ATM networks and signing up for overdraft protection at your institution," he said.

Sid Glandon, an associate professor of accounting at the University of Texas at El Paso and an El Paso certified public accountant, said "banks have to charge for their services."

Glandon, however, said consumers can fight back by balancing their checkbooks every month to avoid bouncing checks. Consumers can also monitor their accounts online, which is especially important if you use your debit card a lot, he said. Consumers who frequently use their debit cards "run the risk of spending more than they have" if they don't write down the transactions, Glandon said.

Look for a free checking account, but make sure you know about any minimum balance requirements and stay above that, Glandon said. One way to deal with a minimum balance requirement is to "trick yourself" by not including that amount as part of your available funds that you can spend, Glandon said.

Les Parker, chief executive officer and president of locally owned United Bank of El Paso del Norte, said many banks use fees as an additional revenue source.

During the past 20 or 30 years, the amount of money banks can make off what's known as the spread has decreased, Parker said. The spread, in its simplest form, he explained, is the difference between what banks pay for money when they borrow from other banks or what they pay depositors, and what they can generate off that money with loans and investments.

"Since that spread has declined, many banks have increased their fees for ATMS, overdrafts and many other fees," Parker said. "I've seen banks with 100 different fees."

Consumers should shop around for a bank or credit union with the best fees for their particular financial style, he said. But also factor in customer service and how you're treated, he added.

United Bank, which has three branches in El Paso, does not have any ATM machines. It doesn't charge its customers for making ATM withdrawals from other banks' machines and it reimburses customers for the fees charged by other banks for up to five transactions each month, Parker said. McBride of Bankrate.com advises consumers to "break the habit of going to the nearest ATM and coughing up several dollars each time for the privilege."

To avoid bouncing checks, monitor your account online, be diligent about writing down small debit-card transactions and call your bank and ask for overdraft protection that's linked to a savings account, McBride added.

You might also consider switching from an interest-bearing checking account to a free non-interest checking account available at banks and credit unions of all sizes, McBride said.

Mike Sullivan, director of education for Take Charge America in Phoenix, said on a recent vacation, he didn't use an ATM once and just got extra cash whenever he made a purchase at a grocery or discount store.

ATM fees "are one of those things that catch up on consumers," Sullivan said. "They don't realize how much it can add up."

The best way to avoid bank fees is to change your habits while being an aggressive consumer who shops around for the best bank or credit union, Sullivan said.

Sullivan suggested using Web sites such as Bankrate.com to research bank accounts and find the best deal.

David Burge may be reached at dburge@elpasotimes.com; 546-6126.

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