Convenience counts

The recent announcement that Bank of Queensland had signed an agreement with an automatic teller machine supplier to add 400 new ATMs to its network is good news for consumers. The cost of using ATMs can be a significant part of everyday banking for many people and having access to a large fee-free network is an important consideration when choosing a transaction banking service.

While a number of transaction banking costs are going down, the cost of using ATMs that are not provided by your own bank is going up.

Bank of Queensland is part of the rediATM network, which is operated by the banking services company, Cuscal.

BOQ's new ATMs will be added to the rediATM fleet, taking the number of machines to 3800.

Commonwealth Bank has the biggest bank-owned ATM network with about 4000 machines, followed by Westpac and St George Bank with about 2800 and ANZ with 2500. National Australia Bank is a rediATM partner.

In April 2009 the Reserve Bank of Australia (RBA) made a number of changes to the ATM system. Customers using a machine not owned by their financial institution (a "foreign" ATM) would be charged directly by the ATM owner rather than being charged indirectly through their financial institution.

The RBA reported in March that the average cost per withdrawal (where the consumer is using a foreign ATM) is $2.04 - an increase of 4? over the previous year.

Seventeen per cent of ATMs have charges of more than $2 for a foreign withdrawal, compared with only 5 per cent a year earlier.

Charges are 13? higher, on average, in remote locations. The highest charge the RBA found was $5 for a cash withdrawal.

The RBA says the average cost for a balance inquiry has gone up from $1.76 to $1.82 over the past year.

Earlier this year the independent ATM operator Cashcard put its fee up from a standard $2 to a scale ranging from $2.20 to $2.50 and iCash Payments increased its charge from $2 to $2.40.

Customers Limited, the largest non-bank owner of ATMs (with 6500 machines), increased fees on part of its fleet late last year.

A lot of people avoid these charges by only using their own bank's ATMs or by getting cash out when they do an eftpos transaction. But there are plenty of people who pay a charge for a significant number of their ATM withdrawals.

The RBA says people aged 18 to 29 pay a charge on one-third of their ATM withdrawals, whereas people aged 50 to 59 pay a direct charge on 15 per cent of withdrawals and people over 60 pay direct charges less than 10 per cent of the time.

People in regional areas pay a direct charge on a larger proportion of their ATM withdrawals (29 per cent).

In its report on ATM usage in its March quarter bulletin, the RBA says: "Younger consumers are more likely to pay direct ATM charges. This reflects a variety of factors, such as different preferences regarding the use of their time and the locations of cash withdrawals. Direct charges are higher in licensed venues and retail premises."

The Australia Institute looked at ATM usage in a report published earlier this year and found that: "One of the most expensive ways for Australians to access their own money is by using an automatic teller machine that is not provided by their own bank."

It also found that young people paid the most. Forty per cent of people aged 18 to 24 pay an ATM fee at least once a week.

Networks such as rediATM have become increasingly important since the RBA introduced direct charging.

Participants in the redi network include seven banks, three building societies, more than 90 credit unions and a dozen other financial institutions, including superannuation funds, fund managers and mortgage brokers.

The Cash Plus network, whose partners include Bendigo and Adelaide Bank, has 1100 machines.

- Get to know your financial institution's network. Is it part of a big network such as rediATM, or does it have a service agreement with big bank networks? (For example, HSBC customers can use Westpac ATMs free.)

- Use eftpos for withdrawals. Cash out with a purchase is usually free.

- Check your account balance by phone or internet, not at the ATM.