SURCHARGING ATMs TO OUTNUMBER FREE-TO-USE MACHINES

ACCORDING to shock new findings from Sainsbury’s Bank, by October 2007 there could be more fee-charging cash machines in the UK than free-to-use ones.  This is based on the fact that the number of surcharging cash machines is growing more rapidly than the number of free-to-use ATMs. Between June 2004 and June 2005, around 286 surcharging ATMs were installed every month as opposed to 53 free-to-use ones. If this rate continues, the researchers estimate that by October 2007 the number of surcharging ATMs could increase to 33,821 compared to just 33,718 free ones.

Given the dramatic increase in the number of surcharging ATMs, Sainsbury’s Bank warns that during 2006, consumers could make around 110 million withdrawals from these machines and pay well over £140 million in charges for doing so.

Tim Pile, Chief Executive, Sainsbury’s Bank said:- “We are deeply concerned about the dramatic increase in the number of surcharging ATMs and the very real threat that they will soon outnumber the free-to-use machines. We believe that it is fundamentally unfair to make consumers pay for using an ATM to access their own money, and we urge all consumers to make sure they know whether or not the ATM they plan to use charges for making withdrawals."

Sainsbury’s Bank does not apply surcharges for people using any of its cash machines and over the past 2 years has increased its number of ATMs by 129%, with plans in place to add many more. These machines are conveniently located at Sainsbury’s supermarkets, Sainsbury’s petrol forecourts and at hundreds of local convenience stores throughout the country.

There are currently around 23,931 ATMs in the UK that apply surcharges for withdrawing money, compared to 32,355 that are free to use. A typical charge is £1.25 but some machines charge as much as £5.00 per withdrawal.

From July last year, any ATMs that apply a charge must clearly display this on the screen and consumers must confirm that they accept this before completing their transaction. The new rules have been introduced by Link who are using NOP, the market research group, to conduct regular spot checks to ensure providers are complying with these rules, a development Sainsbury’s Bank strongly supports.

5 MILLION CREDIT CARD HOLDERS HIT WITH PENALTY FEES LAST YEAR

ALMOST 5 million UK credit card holders paid a penalty fee on their plastic in 2005, according to new research.  The report, commissioned by MoneyExpert.com and Defaqto, found more than 10% of the population racked up charges for items such as late payments and exceeding credit limits. It also found as many as 1 in 5 cardholders do not understand fully how a credit card actually works.

The Office of Fair Trading is currently investigating the level of charges levied by card firms with the aim of forcing them to cut fees. It has already written to 8 providers ruling that their late payment charges are “excessive”.

MoneyExpert.com partnered with financial information and research company Defaqo to commission the research which highlights the stark need for better financial education. The organisations warned that uninformed consumers are unnecessarily vulnerable. As many as 4.5 million people intend to switch credit cards early this year and the firms say some could be ‘buying blind’ because they do not understand which product is best for them.  They have teamed up to launch a free independent guide on credit cards to help confused customers get a better grip on their finances. The guide is available at www.moneyexpert.com.

Sean Gardner, MoneyExpert.com’s Chief Executive, said:- “A single late credit card payment can cost as much as £35 so it is worth handling your finances well. It is worrying that so many people do not feel adequately informed about their credit cards. The current market puts such an emphasis on interest rate that people may have lost sight of the complexities of some financial products.  You shouldn’t even consider taking out a financial product if you don’t feel you fully understand what you are buying.  Our guides are designed to be user-friendly and aim to tackle this issue head-on. There is clearly a need for better financial education in the UK and we hope people will take the opportunity to research the credit card market before committing to anything.”

The research study interviewed adults aged 18 and over and found that some 11%, that's 4.99 million people, have had to pay a penalty fee on their credit card in the past 12 months. Around 21%, that is 9.8 million people, regard paying off their credit card as one of their biggest financial challenges this year, suggesting many cardholders are keen to avoid penalty charges in 2006.