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Big banks’ ATM edge disappearing?

By Claes Bell, CFA · Bankrate.com
Wednesday, August 22, 2012
Posted: 4 pm ET

Word came today that First Midwest Bank in Chicago has signed on to be part of the Allpoint network, which will give its customers surcharge-free access to ATMs, mostly located in convenience stores and pharmacies, in all 50 states.

Its ATM network will now expand from 130 ATMs to 43,000, giving it a national reach and putting it on a level playing field in terms of ATM access with the biggest banks in the country.

First Midwest is part of a growing trend of small and midsize banks and credit unions, vastly increasing their reach through ATM sharing and third-party vendors.

One of the big reasons people have historically signed up with big banks is their large networks of branches and ATMs. Especially for people who travel frequently or have to relocate frequently for work, finding an ATM nearby no matter where you are can save time and fees. Setting up and maintaining those networks is a huge expense that only the largest banks can afford to bear, and that gave them a competitive advantage in convenience over small banks and credit unions.

Smaller institutions have been working on ways to erode that advantage for a while now, and they've succeeded in closing the gap to a remarkable degree. As many credit union fans of Bankrate are fond of reminding me, in the late '90s credit unions formed Credit Union 24, which helped them to forge a nationwide network of shared ATMs, and to even the playing field. If you're a customer of a credit union within the network, you can now conduct banking business at more than 450 credit unions across the country.

Then, in 2003, came Allpoint, which banks and credit unions are increasingly leaning on to expand their ATM networks without having to pay for them. On top of that, many of the major banks are scaling back their plans for ATM growth, or, in the case of Bank of America, shutting down lots of ATMs for good.

For consumers, this is all gravy. They can get the often lower fees and higher yields offered by community banks and credit unions without having to give up ready access to their money anywhere in the country.

One caveat, though. Even with the existence of Allpoint and the Credit Union 24 network, if you find yourself constantly moving for work or some other reason, you'll probably have to end up switching banks if you sign up with one of the little guys. Allpoint ATMs won't take your deposits, and you may want to have a full-service branch nearby to resolve customer service issues.

What do you think? Have you used Allpoint or Credit Union 24? What was your experience?

Follow me on Twitter: @ClaesBell

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2 Comments
w.a.
September 05, 2012 at 7:59 pm

i depend on SC24. my main credit union only has one ATM so I regularly borrow other credit unions.
biggest problem is finding SC24 ATM's that take "foreign" deposits, i.e., another financial institution. None around here, limited number in Kansas City, but very common in Michigan
Second biggest problem is the mentally limited institutions like
DFCU Financial C.U. (ex-Dearborn Federal C.U.) who don't grasp that the A.T.M. you used WAS SC24 and still stick you for a service charge. DFCU Financial is a poster boy for ingrown "Detroiter" stupidity and ignorance of the outside world. Frustrated me repeatedly with their incompetence.

Michigan used to have SC24 shared branches where one teller could handle activity for any participating credit union. Name changed after a California group took them over.
Here, most C.U. branches are "shared" so that you may walk in or drive up and access your account at your home C.U. Requires a special form to fill out.

biggest concern is these STM (ATM's that count your money). Guaranteed NOT to accept your full dollar deposit and a real pain to work with. B. of A. and Commerce Bank both went with those, and both lost my business