Philadelphia-area consumers are paying some of the highest overdraft and ATM fees in the country, according to a report released Wednesday.

The Philadelphia region has the highest average overdraft fee — $35.30 — out of the top 25 major metropolitan areas, according to a survey of 250 banks and thrifts by Bankrate.com. Nationwide, the average overdraft fee was $33.23, down from $33.38 a year ago but still the second-highest on record.

The region also has the eighth highest average out-of-network ATM fee at $4.91, which reflects surcharges from the ATM operator and the consumer's financial institution. The nationwide average was $4.68, down a penny from last year's record high. Bankrate.com began the annual survey more than 20 years ago.

"Banks charge what the market will bear, especially on a punitive-type fee such as an overdraft," said Greg McBride, Bankrate.com's chief financial analyst. "When competitors can get away with charging a higher fee, others tend to follow. True to form, we see the largest players in the market charging $35 or $36 to a larger extent than other markets where some are charging lower fees."

While fees imposed by ATM owners for out-of-network transactions rose for the 14th straight year, surcharges by consumers' own banks for using another's ATM fell from $1.72 last year to $1.66. More banks are decreasing this fee than increasing it, according to the survey.

Highest avg. overdraft fee

Philadelphia metro area compared to the top 25 metro areas in the U.S.
SOURCE: Bankrate.com
Staff Graphic

Charging non-customers for out-of-network transactions is "low-hanging fruit" for banks to maintain fee revenue because "nobody is worried about alienating the noncustomer," McBride said.

The survey found 32 percent of banks are offering accounts that allow consumers to make a limited number of free out-of-network withdrawals, the most the survey has ever found. But Bankrate.com did not see an increase in those accounts in the Philadelphia area, which contributed to the region's above-average out-of-network ATM fee, McBride said.

Overdraft and ATM fees may continue to climb, but they remain completely avoidable, experts said.

Consumers can opt out of overdraft protection to avoid incurring the fees, said Patty Hasson, president of Clarifi, which offers free or low-cost financial counseling in the Delaware Valley.

"That does mean you may also have checks that will bounce, so you then have to stay on top of your account," she said, adding that many banks offer text or email alerts notifying customers when they have low balances.

To avoid ATM fees, plan ahead and check a financial institution's website or mobile app to locate the nearest fee-free ATMs, McBride said.

"If you're really in a pinch for cash, you can get cash back when you use your debit card at point of sale," he said, noting Bankrate.com hasn't seen fees for these transactions.

And don't hesitate to use a debit card for that cup of coffee, Hasson said.

"If you're going to get cash because you're making a small purchase, just use the card," she said.

Highest avg. ATM fee

Philadelphia metro area compared to the top 25 metro areas in the U.S.*
*Reflects both ATM fees combined (those charged by the out-of-network ATM operator and those charged by the consumer’s own financial institution.) SOURCE: Bankrate.com
Staff Graphic