FIGHT BACK!  BY DAVID HOROWITZ

A Second Look at ATM Cards
        
        I've been a big fan of automated teller machines since  my bank
sent me my first ATM card. What a great concept! They  seemed so handy,
especially for someone like me, who works  all sorts of crazy hours in
the news business. With the card,  I could get cash, make deposits and
check by account balance  at my own convenience -- not the bank's. I
could even get  money from another bank.

        Later, the banks added point-of-sale purchases using ATM  cards.
I could buy gas, groceries and even fast food without  having to write a
check (I could even go to places that don't  take personal checks) and
get cash back if I needed it. The  money was simply deducted from my
checking account, no  questions asked.

        Of course, it was all too good to last. The banks  quickly
realized they could recover their operating costs by  charging their
customers a fee for using their ATM cards.  Presumably, by that time, we
were already hooked on the  convenience of ATM transactions and would be
willing to pay  for the privilege. And, if the banks could recover their
costs, they could also turn a profit on the whole system.

        Here's how the arithmetic works out, according to a  study of
ATM fees by Professor Janice Shields of Bloomsburg  University in
Pennsylvania. In 1993, the banks took in $2.55  billion in ATM fees paid
by their customers. Add $2.34 bil- lion in savings from reduced teller
costs. Now subtract $2.9  billion in equipment and operating costs, and
that leaves the  banks a tidy profit of around $2 billion a year.

        That study brought a quick reaction from the American  Bankers
Association, which said Shields' numbers and analysis  were faulty and
did not support her conclusion that the banks were profiting enormously
from ATM fees. The ABA insists that  ATM use does not save the banks
money and that such  transactions are a convenience that consumers
should expect  to pay for.

        Increases in ATM costs got my attention recently when my  own
bank raised its fee for withdrawals at other banks and  free-standing
machines from 50 cents to $1.25. It also added  a 25-cent charge for
point-of-sale purchases. And that  changed the way I use my ATM card.
For one thing, I use only  my own bank's ATM's for cash unless it's an
emergency (80  percent of all banks still allow free ATM transactions at
their own branches).

        Here's another example, using gasoline prices. When Arco
discontinued its credit cards, it dropped retail gas prices  to reflect
the savings. But customers could still use ATM  cards at Arco stations
for a 20-cent additional fee (later  raised to 25 cents). Now add the
bank's 25-cent fee for  point-of-sale purchases. That's 50 cents more
for each tank  of gas. Let's say the tank holds 10 gallons. That 50 cent
fee, divided by 10 gallons, adds a nickel to the price of  each gallon.
Add that nickel to the posted Arco price, and  it's no longer such a
bargain, especially since other  stations take credit cards for free.

        Want to beat the fees? Here are some tips.

        -- Pick a bank with branches that are convenient to home  and
work.

        -- Withdraw cash only at your own bank's ATM.

        -- If your bank charges for ATM transactions at its own
machines, deal with live tellers or use the night deposit.

        -- If your bank does charge for using its own ATMs, find
another bank. There are lots of them out there.

        If you have any questions or comments, please write to  David
Horowitz in the Consumer Forum+ (go FIGHTBACK). COPYRIGHT 1994 CREATORS
SYNDICATE, INC.