Issue date: Oct. 30-Nov. 1, 1998

"Can you wait a sec? I need to stop by the cash/movie ticket/postage stamp/coupon machine."

ATMs keep getting more convenient. But beware of surcharges.

In this article:
Money at the Millenium

ecently I was in Boston running errands with a friend. She needed cash and stamps, and, to my surprise, she didn't have to travel farther than an ATM. "Withdrawal, cash advance or U.S. postage stamp purchase?" asked the BankBoston machine. The 18 stamps cost a quarter more than they would have at the post office. But it saved us 20 minutes.

Welcome to the era of the souped-up, added-value cash machine. In the West, Wells Fargo's automated teller machines now peddle discount vouchers for lift tickets at four Lake Tahoe ski resorts. Bank of Hawaii ATMs recently began selling tickets on Hawaiian Air flights. And according to Mentis, a bank research firm in Durham, N.C., 28 percent of machines owned by large banks now sell stamps, while 9 percent sell prepaid telephone cards and 28 percent dispense documents such as coupons for dry cleaners or fast-food haunts. These sorts of non-bank applications are expected to double this year.

Banks are busy turning ATMs into what are basically vending machines because they want to make you a customer. That's why BankBoston stamps, for example, are available only to BankBoston customers. If you want to buy them, you have to move your account.

For most people, however, stamps or lift tickets are not enough of a lure to switch banks. But getting hit with a surcharge of $1 or $1.50 every time you use another bank's machine might make you think twice about which bank you really want to use.

Many people find that if another bank's ATMs are significantly more convenient, it pays to switch to avoid surcharges. In fact, a recent Boston Globe poll of 500 small-bank customers discovered that 33 percent would be very likely or somewhat likely to switch to another bank to avoid ATM surcharges.

That explains why surcharging is going so strong. One recent bank survey showed 83 percent of banks now surcharge, nearly double the number that surcharged a year earlier. The average surcharge is now $1.23, up from $1.15 a year ago.

The surcharges are controversial. Some 25 state legislatures are considering banning them. New York and Vermont have proposed laws to ban them on a national level. But industry watchers say these fees don't look as if they're going away soon.

It's significant pocket change. Today, the average consumer age 18- 34 visits an ATM eight times a month. If that consumer uses another bank's ATM, say, half the time, at a $1.50 surcharge, it'll cost $72 a year. How can you save that money?

• Use your own bank's ATM. Most banks don't charge their customers for using their machines.

• Look for machines that don't surcharge. A handful of banks - including some as large as Chase and Citibank - still don't surcharge.

• Visit the machines less often. Even if you're occasionally forced to use another bank's ATM, minimize the cost of the transaction by withdrawing more cash.

• Get cash in the checkout line. Stores that let you pay with your ATM card are often willing to give you cash at the same time. Many don't charge for the service, but even those that do charge substantially less than a typical surcharge.

MONEY at the millennium

Come the new millennium, automated teller machines
will be equipped to sell just about any paper product that can be dispensed as easily as cash. Take tickets. ATMs will be able to sell you tickets not only for planes and trains, but also for ballgames, concerts and Broadway shows (they'll even give you a choice of seat).

What's more, in-bank ATMs will help their landlords with targeted marketing. Don't be surprised when your machine addresses you by name, then asks whether you'd like to open a money market account, roll over a certificate of deposit that's coming due or take out a car loan - all in the space of 15 seconds.

And you thought you came to the bank simply for cash!

Contributing Editor Jean Sherman Chatzky, a Money Magazine Editor, wrote "The Rich and Famous Money Book". She is seen on NBC's "Today Show" and MSNBC.
Illustration Credit: BRYAN LEISTER FOR USA WEEKEND