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How do banks profit from automated-teller machines? ATMs have sprouted up all over during the last couple decades, and their convenience can't be beat. But I thought banks make their money holding on to our money, so why would they bother doing something that would make it so easy for us to take our money back? I'm rarely charged an ATM transaction fee, but I suspect that using ATMs may not be as free as it seems. Please illuminate me. --Steven Brett, Evanston, Illinois

Of course it's not free--the bank just buries the cost in the other fees it charges you. (Fees, which may be disguised as minimum- balance requirements, are how the bank makes money on your checking account. The typical checking balance fluctuates too much to enable the bank to profit merely by making loans with your cash.) ATM charges weren't always hidden. In the 1980s many banks began charging for ATM transactions, reasoning that customers would be willing to pay for the convenience. Many weren't. ATM usage, which had been growing rapidly till then, began to level off in some markets. Banking-industry geniuses realized it was foolish to discourage ATM use since the alternative was maintaining a large and expensive staff of tellers. A teller transaction can cost two or three times as much as an ATM transaction, and sometimes even more.

So banks wised up. A 1988 survey found that 25 percent charged customers to use the bank's own ATMs; today only 12 percent do. A much larger percentage charge a fee for "foreign" ATM use, that is, using a cash machine not owned by the customer's bank. These fees are often steep, $1 to $2 for a service that may cost the bank something like 60 cents. But you can avoid the expense by not using foreign ATMs.

The real trend now is charging customers to use tellers. The First National Bank of Chicago got national flak for imposing a $3 fee for teller transactions, having neglected to make clear that the fee won't affect most customers, since 80 percent of them use tellers no more than four times per month and the fee kicks in only after six teller transactions per month. Fact is, tellers are an endangered species, at least at larger banks. Some institutions, such as Citibank, report that 80 percent of their withdrawals are done by machine, and what with the rise of direct debits and deposits, banking by computer, and other automated technologies, banking moguls dream of the day when all transactions are.

MEDICAL NEWS FLASH #1

As an otolaryngologist with 15 years' experience, I have had more than one occasion on which a victim of ear candling [March 10, April 21] has presented to my office with excruciating symptoms caused by melted wax adhering to the eardrum. This often necessitates minor surgery and puts the patient's hearing at risk. In addition to debunking the efficacy of ear candling, you should mention the inherent danger to hearing. --C. Christopher Smith, MD, FACS, Dover, New Hampshire

MEDICAL NEWS FLASH #2

In reference to "Question We're Still Thinking About" in the March 10 issue: I have burped, farted, and sneezed at the same time, and I am still alive. --Dan Povenmire, Los Angeles

Doctors Levinson and Swain's patients are suffering from a trauma caused by National Lampoon in the early 70s, in whose pages there was a High Flying Rumors Contest. First prize was awarded to the following: "If you burp, fart, and sneeze at the same time, you will die." Although I've kept this information in memory with my tongue firmly planted in cheek, I suspect that some other Lampoon readers took it as gospel. I myself have used this information as way of breaking the ice at parties but never did I dream it would become legend. --Randy S. Lavine, Culver City, California

Art accompanying story in printed newspaper (not available in this archive): Illustration/Slug Signorino.

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