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Banking on ‘ATM freedom’
Question of the Day
Banks in the Washington area increasingly are giving their customers “ATM freedom.”
In an effort to keep their best customers and lure others in the competitive market, many banks are eliminating the charges imposed when customers use a competitor’s automated teller machine (ATM) and even reimbursing the fee charged by the other bank — fees that can add up to $4 or more.
The catch: Customers usually must keep their account balances in the thousands to qualify.
Such banks offer them in hopes of retaining their best clients and encouraging them to keep all of their accounts at one bank, said Greg McBride, a financial analyst at Bankrate.com, a Florida Web site that tracks financial services information.
“Banking is very competitive, and it is expensive to attract new customers; it’s a lot cheaper to keep the customers you have,” Mr. McBride said. “The [policy] is essentially a way to dangle a little carrot in front of some of their most valuable customers.”
He predicted that the fee-waiving and reimbursement policies will continue to spread.
“I do think that this trend has not matured yet. We will continue to see more of this in various parts of the country,” he said.
Last year, consumers spent more than $4.2 billion in withdrawal fees, according to Bankrate.com. In the fall, about 98.3 percent of banks nationwide assessed surcharges of an average of $1.64 on noncustomers using an ATM, and fees charged by the customer’s own bank averaged $1.25. The bankrate.com survey found the Washington area had the highest average fees in the U.S.
One of the first banks to offer the policy, PNC Bank, reimburses its customers when they use any competitor’s ATM across the country. PNC tested the program in the Washington area when it moved into the region in May 2005.
The Pittsburgh-based company then decided to adopt the policy at its 1,077 branches across the Mid-Atlantic region. Customers went from being able to use one of the 3,600 PNC ATMs for free to any ATM anywhere. Customers of Mercantile Bankshares and its family of banks will be able to qualify when PNC completes its purchase of the Baltimore bank company, expected in September.
“Customers love being able to know that every ATM in the world is their own ATM,” Ms. McCormick said. “People dislike paying for access to their own money.”
The policy is not available to all customers, however. To qualify, customers must maintain a monthly balance of $2,000 in their accounts, a requirement that was reduced from $2,500 in March.
Commerce Bank also reimbursed ATM surcharges as a way to attract new business when it moved into the Washington area in June 2005, said Kevin Gillen, the bank’s president for the area. The policy applies to all new checking account customers for the first year, but after that, customers must maintain a daily balance of $2,500 through the entire statement cycle.
By Orrin G. Hatch
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