Personal Finance: The cashpoint war continues apace

When Barclays took the lid off Pandora's box it did us a favour; it exposed a network of greedy charges

The controversy that surrounds the decision by Barclays Bank to impose a surcharge on the customers of other financial establishments whenever they withdraw cash from Barclays' network of automatic teller machines (ATMs) has taken a new twist.

On Thursday Barclays and Nationwide, which is threatening to sue over the proposed surcharge, declared a truce - preferring "jaw, jaw" to "war, war". Nationwide is deferring the threat to sue while Barclays has agreed to delay the imposition of the surcharge. However, the move has certainly brought to light the hidden costs which customers face from various banks when using cash machines.

Some customers will find that their banks are charging them a disloyalty fee. This oddly named charge is levied on the customer for using another bank's ATM, rather than its own. For example, if you are a NatWest cardholder and you withdraw money from a Halifax machine, you will actually be charged a disloyalty fee of 60p.

However, if you think that being charged by your own bank for using another bank's ATM is bad enough, some banks also charge you a surcharge. A surcharge is when a different bank charges you a fee for using its facility.

This is what Barclays is proposing to do. At the moment it charges its customers a disloyalty fee of pounds 1.50 but, as of 11 October, this will change. Disloyalty fees will be abolished and rival customers will have to pay a surcharge of pounds 1 - you could say the bank is shifting the burden of charges from its own customers and is therefore putting their interests first.

Apart from customers having to pay for the use of cash dispensers, banks and building societies using the Link service do, too.

Each time one of their customers makes a Link transaction, they have to pay 30p. This means that the larger banks are making more of a profit because they have far more machines available than smaller banks.

The Link Interchange Network Service was established, in 1986, with the aim of supplying banks and building societies with a joint UK network of ATMs. Today, it lists 34 financial institutions among its members, which gives customers easy access to more than 25,000 cash dispensers. It is a system that most banks are keen to support.

Left, is a chart of the fees charged by each bank. As an example, if you are an Abbey National cardholder and you only have access to a rival bank's ATM, you will be charged a disloyalty fee of pounds 1.50 each time you make a transaction.

Therefore, if you withdraw pounds 20, say twice a week on average, your account will be debited pounds 43, totalling pounds 2,236 per year. However, if you happen to use a dispenser with a surcharge, for example, Barclays (pounds 1), then you will be paying pounds 104 on top of the pounds 2,236. So, you are being charged pounds 260 to withdraw pounds 2,080 a year.