By Shelia Watson
Contributing Writer

ATM fees are at an all-time high, and for many banks, the sky appears to be the limit. Setting the pace is Bank of America, which last month raised its surcharges for non-customers from $2 to $3 at most of its ATMs nationwide.

That may be only a dollar more per withdrawal, but Bankrate, the online aggregator of financial rate information, has done the math. Its 2007 Checking Study showed the average ATM fee surging to $1.78, up from $1.64 last year. Today, the most common ATM surcharge rate is $2, up from $1.50 a year ago, and 99% of banks surveyed charge a fee for its customers using the card at another bank’s ATM.

You’ll need a calculator to crunch the big-picture numbers on a report produced by the Government Accountability Office, which showed ATM fees charging consumers some $4.4 billion in 2006.

And doing the math on an individual account might be easier, but the tally is no less shocking for the account holder: At $3 each, three withdrawals per week adds up to $468 per year.

After Bank of America’s move, other banks quickly followed suit, including U.S. Bank in California, PNC Financial Services Group in Pennsylvania, Commerce Bancorp Group in New Jersey and several Wachovia branches on the East Coast.

Bankrate noted that some of the banks have attempted to make amends—and lure deposits—by agreeing to pay customers’ ATM fees from other banks, but for the most part, the rate hike by Bank of America, which has the largest ATM network in the country, seems to be the preferred business model. According to the Bankrate survey, 22 banks have increased the fee since the survey was conducted the year before, while only six reduced the fee during the same period— an indication that lowering ATM fees is less likely to be used as a competitive advantage to seek new customers.

Bank of America spokeswoman Betty Riess said the increase is designed to reduce traffic from non-customers at its ATMs and thereby improve access and convenience for its account holders. Among its network of 17,000 ATMs around the country, Bank of America has raised rates at 10,700 of them, leaving the withdrawal fee at $2 at airports, shopping malls and convenience stores.

“In order to maintain (a convenient ATM network), it is appropriate to charge people who aren’t our customers for accessing our convenience,” Riess said.

The fee increase may also be considered a strategy for profitability. Riess said the higher fees will help offset the “significant investment” the bank has made to upgrade and expand its ATMs.

The bank’s justification for the investment in the ATM equipment is borne out by the cost of the technology. According to the American Bankers Association, the machines cost between $9,000 and $15,000 each and between $12,000 and $15,000 in annual maintenance.

In addition, banks pay an interchange fee for each transaction, which is why most banks charge customers for using a different bank’s ATM.

Riess pointed out that the fee is disclosed during the transaction, so “customers can opt out and cancel their transaction” if they disagree with the fee.

Consumer advocate and business labor groups are not taking the fee increases lying down. Some of them have asked Congress to hold hearings on the bank charges, although that avenue may prove to be less helpful than what is hoped. Several bills have been introduced in

Congress since surcharging began in 1996, but so far none have gone beyond committee.

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