B of A Will Levy Fee for Using Its Teller Machines : Holders of Basic Checking Account Will Be Charged 30 Cents Per Withdrawal

Bank of America will begin charging customers with its basic checking account 30 cents each time they withdraw cash from its automated teller machines unless their balances average at least $500.

The San Francisco-based giant is the last of the state’s four major banks to begin charging a fee for using bank-owned automated teller machines, known as ATMs. But the practice is rare in the rest of the country and among other California banks and thrifts.

The fees may also stall efforts by banks to encourage customers to use ATMs, which the banks have promoted as a way to save customer time and cut bank overhead, according to an industry expert.

The new fees at B of A take effect Dec. 29 for customers who have the standard checking account, known as the Custom Choice. A fee of 30 cents will be assessed for each withdrawal from a Versateller, as the bank calls its ATM system.

The bank charges the same fee for each check written and for each point-of-sale transaction, such as using a card to buy gasoline. The bank is also raising the monthly service charge for the basic checking account to $3 from $2.50. Previously, customers could write eight checks a month without a transaction fee.

Customers who maintain a minimum daily balance of $500 will not be charged 30 cents per transaction, which consumer advocates said means that the new charges will hurt low-income and moderate-income families the most.

Face Increased Fees

“We are talking about a really sharp increase in fees for customers who can least afford it,” said Ken McEldowney, executive director of Consumer Action, a San Francisco-based consumer advocacy organization. “It could easily double or triple monthly service charges for customers. Bank of America customers are going to find these hikes hard to stomach, given recent articles about the improved financial condition of the bank.”

Richard R. Martino, vice president in charge of checking and ATM products at Bank of America, acknowledged that a large number of customers face a “fairly significant” increase in monthly fees.

“On the other hand, their total overall service charge will not be way out of line in terms of the marketplace today--banks or savings and loans,” said Martino.

The banking industry has gradually begun charging for more services that were once given away as a result of increased competition with other financial institutions and other factors. But charging for ATM transactions has remained controversial within the industry and among consumer advocates.

Bank of America has about 3 million checking accounts; it has 4 million Versateller cards in circulation. B of A has about 30% of the checking accounts among California banks and 20% of the accounts when savings and loans are included.

Bank of America’s main California rivals also charge a fee for ATM transactions to customers who do not maintain a minimum balance in a basic checking account.

Security Pacific in Los Angeles and Wells Fargo in San Francisco both charge 30 cents a transaction. Los Angeles-based First Interstate assesses a fee of 15 cents per transaction.

Most of the state’s other banks do not charge a fee for using bank-owned ATMs. A random telephone survey found that Union Bank, Sanwa Bank of California and City National Bank, all among the 10 largest in the state, do not charge customers for using the bank’s own ATMs.

Few Assess Charge

Most banks and thrifts do charge fees of 75 cents or $1 per transaction for using an ATM machine owned by other institutions, such as those that are part of the Cirrus or Star networks.

A nationwide survey conducted earlier this year by Sheshunoff & Co., an Austin, Tex., financial consulting firm, found that only 16% of the nation’s banks charge a fee for withdrawals from ATMs owned by the bank. The charges ranged from 10 cents to 50 cents.

A spokesman for the California League of Savings Institutions, Kirk Hallahan, said he did not know of any savings and loans in the state that charge a fee for using its own ATMs. “We are still at the point of encouraging people to use ATMs instead of standing in lines,” Hallahan said.

Wanda L. Cantrell, editor of the Chicago-based trade publication Bank Network News, said charging a fee for using a bank-owned ATM is likely to discourage customers from using the machines, which banks have spent the past decade pushing as money savers for themselves and time-savers for their customers.

“This charge is very uncommon,” Cantrell said. “It defeats the whole purpose of getting consumers to use ATMs.”

B of A’s Martino said banks have not charged for ATMs in the past because they were uncertain that customers would use them. Now that the machines have gained some acceptance--about half of B of A’s customers use them regularly--banks have changed their attitude.

“We gave the system away to get people to try it,” Martino said. “Now that we have established that there is a value to this service, we are asking ourselves what’s wrong with charging for something to which there is a value.”