The underdog is hungrier


Bank of America ATMs I came across this bus shelter ad in San Francisco today, proclaiming that Bank of America has “Over 600 ATMs and 140 Banking Centers in the Bay Area.” Impressive! Until, of course, you go to their site and can only find 25 ATM locations in San Francisco. 600 ATMs in the Bay Area but only 25 in San Francisco?

The Wells Fargo site gives us a clue to this puzzle — they also have 25 ATM locations in San Francisco, but they helpfully list the number of ATMs at each location. Since most locations have multiple ATMs, they actually have 42 ATMs total in the city. Likewise for Washington Mutual, which lists 20 ATM locations in the city, but probably has at least twice that many if you count by ATM.

B of A’s ad is probably accurate, then, but isn’t really answering the right question. As a consumer, my questions are: how likely am I to find one of my bank’s ATMs when I need one? And if I can’t find one, what am I going to have to pay to get my money out of some other bank’s ATM? Number of ATM locations for a bank matters more to me than number of ATMs, but according to their web sites, these three banks don’t really differ by that metric (25, 25, and 20 locations respectively). On the second question, according to, in 2005, the average fee for withdrawing money from another bank’s ATM was $2.91. (Remember, you probably are charged two fees, one by the ATM and one by your bank.) also estimates that in 2005, American consumers paid “more than $4.3 billion in withdrawal fees for using ATMs not owned by their own bank.”

$4.3 billion dollars in one year. That’s a lot of money to pay for getting your own money.

So, how many ATM locations does my bank, USAA, have in San Francisco? I don’t know exactly, but in a sense, it’s at least 65. I can use any Bank of America, Wells Fargo, or Washington Mutual ATM — or any other ATM — and my bank will not charge me for doing so (up to ten times a month), and will reimburse me up to $15 a month (footnote 4) for fees charged by other banks’ ATMs. If I use an ATM somewhat less than twice a week (assuming I don’t use an ATM at a horse track, or somewhere else where the fees are cranked all the way up), I pay nothing at all to access any of the ATMs, at any location, in San Francisco.

The reason for this is simple: USAA is an Internet bank, and it doesn’t really have any ATMs in San Francisco. To get customers in the city, they need to find ways to make their solution work for people. They’re hungrier, and they’re willing to spend more making their offering attractive. That’s great. Going back to again, their report confirms that Internet banks like USAA may be a better deal for consumers:

The average balance required to avoid fees on interest checking accounts is only half as bad at Internet banks, $1,250 versus the $2,465 required at traditional banks. Even the average monthly service fee is approximately half, running $5.50 at Internet banks versus $10.85 at traditional banks.

In exchange, you’ll be able to sink your teeth into higher interest earnings. The average yield at Internet banks is 1.96 percent, dwarfing the 0.32 percent at traditional banks.

Internet banks are hungry right now — they’re looking to make headway against traditional banks like B of A, Wells, and WaMu. If you’re looking for a good deal, don’t count the number of ATMs any one bank has in your area. Instead, count the number of dollars an underdog is willing to pay you for your business. $4.3 billion dollars says it will be worth your while.

9 Responses to “The underdog is hungrier”

  1. jolly Says:

    Okay, but what about deposits? One of the reasons I bank with my local brick-and-mortar bank is because I need to _deposit_ money and you can’t deposit money at random ATMs. Yes, I have Direct Deposit, but I still get checks from other sources that I need to deposit from time to time (e.g. rebate checks for buying free-after-rebate stuff. 🙂 ). Walking into a teller is a real chore given banking hours. Being able to deposit checks into an ATM at anytime is a convenience I want.

    That said, I do squirrel money away at an internet bank where the liquid savings account rate (currently 4+% ) is considerably higher than my local bank’s.

  2. Marc Hedlund Says:

    I was trying to pare down the size of this post, so I trimmed out a paragraph about this. Perfect for a comment. 🙂

    USAA recently announced a deal with the UPS Store to address this problem specifically. You can bring a check into any UPS Store (and there are 15 in San Francisco) and drop it off, and it will be credited to your bank account on the next business day.

    (I don’t know if other online banks have made the same deal, but it would make sense to me if they have, or if they do in the future.)

    What a great solution — I don’t want USAA paying San Francisco real estate prices just so I can drop off a check!

  3. Harry Says:

    I think you misunderstood the ATM locations Bank of America displayed on its website. It shows you the 25 closest locations for your search. It may have more than 25 locations but stopped showing you after 25. I’m guessing it’s the same with WaMu and Wells Fargo. Did it occur to you as a little odd that the number of locations from the three banks are all multiple of 5?

  4. Paul Says:

    I do my banking at USAA also, and have been impressed. I have sent more friends to USAA than I can count. Whether B of A has 25 ATMs or 600, Marc’s point stands — when you bank with USAA, every ATM is your ATM. This is surprisingly empowering.

    Other pluses: USAA sends free, postage paid deposit envelopes, so any outgoing mail slot is your deposit window, and when you call about your account, people pick up the phone and are ready to help. I have never not been able to quickly and easily solve a problem by phone with USAA. It’s remarkable.

    B of A has prettier ads, a prettier websites, and branches, but in this case, none of that really matters. USAA’s service is everywhere and immediate.

    (I really don’t have any affiliation with the bank other than as an account holder. They’re good enough that I’ll brag about the company to anyone who will listen.)

  5. Marc Hedlund Says:

    Harry — you could well be right. I tried to sanity-check the results by looking at the WaMu list (since I also have a WaMu account), and the 20 locations their site showed seemed to me to be the only WaMu ATMs I knew about in the city. Do you know of a more accurate list of ATM locations for these banks? I guess the easiest test of your argument using their own search pages would be to put in two addresses at different ends of the city, and look for non-overlapping results.

    As Paul says, though, it doesn’t matter how many ATMs B of A or any other bank has — what matters is that you have a choice between choosing a bank based on its own ATM network, or choosing a bank that will let you use any ATM without paying fees. B of A’s bus station ad was trying to argue for the former model, and I’m arguing for the latter.

    (As Paul also says, I have no affiliation with USAA other than as a customer, and I can imagine that there are probably other Internet banks that offer similar ATM deals. Anyone know of another example?)

  6. Luhmann Says:

    I live overseas and travel a lot. My bank used to make it easy to use my ATM card with foreign currencies, but they upped their fees and it is now prohibitive. Unfortunately, it seems impossible to get good information on which banks offer what rates and fees for international ATM machines. Also, it seems many European countries are now switching to a “chip and pin” style credit card and not having one is a hinderance.

  7. Harry Says:

    As of June 30 2006, you must meet one of these requirements to open a bank account at USAA:

    1. have a military affiliation
    2. be a current bank customer
    3. be a resident of Bexar County, Texas (San Antonio)

    So USAA is no longer available to the general public. If you don’t believe me, call them up. Your main point probably still stands — some online banks are better than banks with local branches, but you really need some better examples and better research next time. Comparing an exclusive club your readers cannot join against banks with local presence is not helping you make your case. Go to a B of A branch and ask for a directory of their branches and ATM machines. Do the same at Wells Fargo and WaMu. Find out how many UPS Stores or other retail outlets in the area handle deposits for an online bank. Find out the hours of those retail outlets. See if B of A is justified in implying that it has more ATM locations than others. I’m not affiliated with B of A. Just want to point out that your methodology is seriously flawed.

  8. Marc Hedlund Says:

    Hi, Harry,

    I didn’t realize that, and I’ll call USAA to ask them about the change and why it happened (and will blog the response here). As you seem to indicate, though, this must be a recent change — I’ve referred many people to them in the past, and have had lots of reports back of people not meeting those criteria getting accounts with them, and being very happy with them.

    On the ATM count, I don’t agree at all that my “methodology is seriously flawed.” I’m using the banks’ own web sites to collect data, and if they can’t be bothered to report accurate data about their offering benefits, I don’t think that I as a customer should have to work harder to get that information. You also seem to be ignoring the part of the post where I say, “B of A’s ad is probably accurate, then, but isn’t really answering the right question.” I’m not saying B of A is being inaccurate — I’m saying their claim was surprising to me but _seems to be true_ based on the data I found on their web site. How is that a “flawed methodology”?

    Also, the larger point of Internet banks averaging lower fees than traditional banks is well-supported by the survey I linked to repeatedly in the post. They have far greater expertise on this question than I do, and they seem to come to the same general conclusion.

    I agree with you that my main point still stands — regardless of whether USAA has changed their policies, people who use banks that refund ATM fees are better off with respect to those fees than people who use “branded” ATMs. You’re absolutely right to ask for other examples (as I also did in my previous comment) — one that I’ve found is AllPoint — They are not a bank like USAA but a network, though it seems like they’re working on the same pitch that I liked about USAA and ATMs. If anyone has other examples, I’d love to hear them.

  9. fred Says:

    As far as depositing checks at USAA they now have it where you can deposit a check from your house. All you have to have is a scanner and be hooked to the internet. If you are writing comments to this there is a great possibility your have both of these. How convienient is that, that you can deposit a check to your bank right from your own home.

Comments are closed.

%d bloggers like this: