Forget the free toaster; ask about ATMs

September 06, 2011

| MoneyRates.com Senior Financial Analyst, CFA

Once upon a time, banks offered things like free toasters as incentives for customers to open new checking accounts. Special promotions to attract business still pop up now and then, but the most important piece of equipment involved in opening a new checking account is the automated teller machine.

For many Americans, the ATM has effectively become the bank branch--the place they go to make deposits, withdraw money and check account information. With fees on the rise for using an ATM outside of your bank's network, you need to make sure that the locations of your bank's ATMs match your needs.

Out-of-network ATM fees in the crosshairs

Financial reversals and new regulations have put a damper on banking profits, so banks are fighting back by looking for new ways to charge or raise fees. The crosshairs of bank executives have settled squarely on ATM fees for non-customers. Why? Think about it. Raising a fee is always a trade-off between increasing your revenues and irritating your customers. If you raise fees for non-customers, you can increase those revenues without upsetting your own clientele.

As a result, several banks have announced, or are contemplating, increases in ATM fees for non-customers. In some cases, these fees can hit $4 or $5 per withdrawal. The most recent MoneyRates Index fee survey found average out-of-network ATM fees up nearly 12 percent in just six months--the biggest percentage increase in the survey.

Choosing a checking account

In short, a bank's ATM network, or at least its policy of reimbursing out-of-network fees, should be a prime consideration in choosing a checking account, right alongside the monthly maintenance fee. After all, a typical maintenance fee is about $12 a month; it doesn't take many trips to an out-of-network ATM to equal that maintenance fee.

Overdraft fees are also a factor when choosing a checking account, but they can be less important because overdrafts can (and should!) be avoided. Meanwhile, free toasters and other special promotions will have to fall even further down the list of checking account priorities.

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