ATM Fees Rise Toward $5 Per Withdrawal

A quick stop at the local deli's ATM could wind up costing as much as your sandwich.

The average fee for using an automated teller machine that isn't tied to a customer's bank rose to a record $4.52 per transaction over the past year, according to a survey from data provider Bankrate Inc.

In Atlanta and New York, the average "out-of-network" fee tops $5 and can rise to as much as $8 in some places under certain circumstances, Bankrate said.

The new average rate reflects a rise of 21% over the past five years. The spike is due in part to banks being under pressure from regulators and consumer advocates to reduce other kinds of fees, such as overdraft and certain credit-card charges.

Another reason: People just aren't using ATMs as much as they used to. Debit-card withdrawals at the ATM are down 41% this decade, according to another recent survey, this one by consulting firm Oliver Wyman.

"Someone has to pay to maintain these ATM networks, and so that burden is falling on the noncustomers," says Greg McBride, senior financial analyst at Bankrate.

There are nearly 420,000 ATMs in the U.S., split equally between financial institutions and independent operators, according to Tremont Capital Group, a Boston-based consulting firm that specializes in the ATM industry.

Banks typically offer free ATM withdrawals for their customers, but people who use a machine that isn't associated with their bank get slapped with fees from their own institution as well as the company that owns the ATM. These "out-of-network" fees can creep up when a customer withdraws cash from another bank's ATM or one of the many nonbank-owned machines that are placed in delis, stores and restaurants.

Mr. McBride calls that "a sloppy financial habit that can put you in the poorhouse."

It isn't clear how much banks are earning from noncustomers who use their ATMs because they don't disclose those figures. But, overall, banks are collecting substantially less from fees than in years past: U.S. banks collected $34.1 billion in fees last year, including those levied on ATM users, down from $41.7 billion in 2009, according to the Federal Deposit Insurance Corp.

Most big banks charge their customers between $2 and $3 for going to an outside ATM. Some banks reimburse the out-of-network fees to their best customers or in exchange for keeping a minimum balance at the bank.

Roughly three-quarters of consumers surveyed by consulting firm Mercator Advisory group say they will do anything they can to avoid ATM surcharges, and 29% said they have never paid an ATM surcharge.

Steve Cohen, a retired computer programmer who banks with Wells Fargo & Co., withdraws money once a month from a Wells Fargo ATM located near his favorite lunch spot in San Francisco. Paying cash just to get more cash, he said, is out of the question.

"I can see no reason to pay a fee unless there's some emergency," he said.

Still, the survey of 3,000 adults found that 26% said they are willing to pay a surcharge in order to use a convenient machine.

San Francisco is one of the U.S. cities with the lowest out-of-network ATM fees, with banks charging an average of $3.85, according to the Bankrate data.

Out-of-network fees are also rising because consumers have more ways to get cash for free. In addition to going to their own bank, shoppers can get cash back at a supermarket or drugstore when they make a purchase.

The Oliver Wyman survey found that on average debit-card users make two ATM withdrawals a month, down from 3.4 in 2005. The survey included 147 million debit-card accounts from 70 financial institutions.

Large banks can have thousands of ATMs in their network, but even smaller institutions have ways for their customers to withdraw money for free when they aren't in the local area. Many tiny credit unions, for example, belong to a cooperative ATM network that has 30,000 cash machines around the country.

In addition to Atlanta and New York, the Bankrate survey found that cities with the highest ATM fees include Phoenix at $4.88, Miami at $4.84, and Milwaukee at $4.78.

The lowest ATM fees were in San Francisco, Cincinnati at $3.86, Kansas City at $4.01, Dallas at $4.11 and Seattle at $4.21.

Average fees vary by city largely because big national banks price differently depending on the market, while local banks may have unique pricing plans.

Write to Robin Sidel at robin.sidel@wsj.com