- The Washington Times - Thursday, August 2, 2001

Large banks jacked up their service and ATM fees by 10 percent more than smaller banking entities between 1999 and 2000, according to a Federal Reserve report released yesterday.

Aside from the $1.50 to $2 surcharge that customers incur when they use an automated teller machine not affiliated with their banks, institutions are creating other fees to tack on to monthly statements.

Card fees and annual fees are not unusual, but the newer fees are those described in the fine print of account agreements. Such fees rose 3 cents to average $1.30 per transaction at large banks by 2000.

Small banks, meanwhile, lowered their fees by the same amount to $1.09 per transaction, and midsized banks kept the fees unchanged, averaging $1.23.

The disparity of the fees is bad news to Washington-area residents, as metropolitan cities tend to be home to larger banks, said Frank Torres, legislative counsel at Consumers Union in the District.

"Year after year, it's the same old sorry story, when it comes to consumers getting hit with big bank fees," Mr. Torres said. "We heard time and time again 'Let us merge because bigger is better,' and what we are seeing is that bigger is more expensive for the consumer."

Banking groups were unfazed by the report yesterday, arguing that the fees help fund new products for consumers.

"The financial-services industry is not fee-driven, but rather is driven by the three C's competition, convenience and low cost," said Steve Bartlett, president of the Financial Services Roundtable, a trade group for the fi-

nancial-services industry. "Consumers who are dissatisfied with fees at one financial-services company can go across the street or online and around the world. The American consumer has virtually unlimited choice."

The newest charges are the foreign fees, which the institutions charge their consumers when they use another bank's ATM. They range from $1.50 to $2 per transaction.

In the Baltimore-Washington region, miscellaneous fees like the foreign fee rose 23 percent, or 25 cents, between 1999 and 2000, according to the Federal Reserve. That raises the average foreign fee to $1.33 per transaction.

But banks are working on alleviating those charges, said Mary Thomas, vice president of ATM Product Management at Allfirst Bank, which has 109 local ATMs.

"We're working very aggressively in offering alternatives to foreign fees," she said. "If they have a relationship with us, which is what we're trying to build, we offer … three free foreign transactions per month."

Allfirst charges its customers $1.75 per transaction at a non-Allfirst ATM, and $1.50 for customers of other banks using Allfirst's ATMs.

Card fees the charges that cover the convenience of having an ATM card jumped 5 percent locally.

Nationally, those fees grew as well, but at a smaller pace. Large and medium banks across the nation raised those fees 1.5 percent and less than 0.5 percent, respectively, while small banks cut them by nearly 3 percent.

"Generally, [reports like the Federal Reserve's] prove the large financial institutions tend to charge fees that are somewhat higher," said Ann All, editor of ATMmarketplace.com, an online publication tracking the industry.

"But this is not a secret, and consumers are very aware of this," she said.

The banks agree.

For instance, to avoid a $2-per-transaction fee, about 80 percent of Bank of America customers use only Bank of America ATMs, said Scott Scredon, company spokesman.

"Consumers are pretty smart, and they know that, and so we find people more and more using their own bank," he said.

Bank of America operates 80 ATMs in the District and more than 900 between Maryland and Virginia.

Mrs. Thomas said smaller banks charge less in fees as a means of competition.

"You've got to be able to compete somehow, so they offer the benefit of lowering the fees to be able to acquire accounts," she said.

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