Follow the Bouncing Check: Many Banks Hiking Bad-Check Processing Fees With BC-Bounced Checks-List

NEW YORK (AP) _ Banks are finding good money in bad checks.

Major U.S. metropolitan area banks are hiking the penalty fee for a bounced check to as high as $30, a financial newsletter reported Sunday. It said some banks even see rubber checks as an attractive and growing profit source.

The average bank fee for a bounced check is $19.35, said the survey by Bank Rate Monitor of the 120 largest banks and thrifts in the 12 largest U.S. metropolitan areas. In contrast, the average fee was $18.58 a year ago and about $15 in 1987, the newsletter said.

''No doubt about it, banks make money off bounced checks,'' said Robert Heady, publisher of Bank Rate Monitor, a weekly that tracks interest-rate trends. The survey, to be published today, was made available early to The Associated Press.

Heady said banks realized in the early 1980s that bounced checks were becoming ''profit centers.'' Consumers are often too embarrassed about bouncing a check to complain about the fee, he said.

A spokesman for the American Bankers Association, John Hall, denied the charge.

''It's certainly not a profit center for an institution. It's strictly a deterrent'' to people writing bad checks, he said. In addition, he said, the number of bounced checks has risen in recent years, costing banks more money.

Banks have increasingly turned to fee-producing services as they have faced gowing competition from finance and other non-bank companies in making loans.

''One thing that's fair to say is that banks are finding they need to price all of their services to make money,'' said Robert Stickler, a spokesman for Barnett Bank, in a telephone interview. The bank's branches in the Miami, Florida area charge $27.50 for a bounced check.

The survey found the average bounced-check fees ranged from $28.90 in Philadelphia to $11.05 in Los Angeles. Heady said fees tended to be lower in California because of lawsuits against financial institutions by incensed consumers.

Other areas surveyed, and their average bounced-check fees, included Miami, a $25.20 fee; Washington, $24.00; Atlanta, $20.90; Houston, $20.25; Dallas, $20; Chicago, $19.20; Boston, $18.30; Detroit, $17.45; New York, $15.60; and San Francisco, $11.35.

''This is not a reasonable price. It's not cheap,'' admitted Pat James, vice-president of retail banking at PNC Bank.

''We don't want to make this (check-bouncing) attractive.''

But if banks are merely trying to stop people from bouncing checks, it's not clear why the fees vary so widely. Why, for example, do New York banks like Citibank or Chemical feel they can deter check bouncers with a $15 fee, while PNC Bank, Continental Bank and five other Philadelphia banks charge $30?

''We set rates according to the rest of the market,'' said Jim Dever, a spokesman for Mellon PSFS in Philadelphia. He seemed puzzled about why Philadelphia's rates were highest. ''There's nothing in the water here,'' he said finally.

Ed Mierzwinski, of the Washington-based U.S. Public Interest Research Group, said it costs banks less than $1 to handle a bounced check. Several banking officials disputed that figure, although none could provide the cost.

''More than 99.99 percent of all checks clear the second or third time,'' Mierzwinski said in a telephone interview. ''It's a method of making money.''

Mierzwinski's group and the Consumer Federation of America released a study in June of 300 banks in 23 states, that showed bounced-check fees had risen 21 percent, to an average $18, from 1990.

The American Bankers Association said small commercial banks charged an average $15 fee for bounced checks last year, while larger institutions charged an average $20.

Heady urged customers concerned about high check-bouncing fees to consider overdraft protection offered by banks. At some banks, the customer must keep a minimim deposit in the bank as collateral.

The real cost of a bounced check may be higher for consumers if it includes fees charged by a store or other company to which the check is written. Many merchants, for example, charge a customer $10 or more for writing a bad check.