Profits are booming at most of the nation's banks, primarily from their consumer businesses, including stiff increases in fees. But some analysts argue that the proliferation of fees may chase away the banks' consumer clients.

"The real big potential for banks is to be able to use the existing customer base to raise profits by cross-selling," said Sean Ryan, an analyst at Bear, Stearns & Co. "That is at odds with the short-run practice of charging nuisance fees," said Mr. Ryan, who compared higher fees to "eating your seed corn."

Bank fees are getting bigger and more common, according to the U.S. Public Interest Research Group, an organization that monitors consumer issues.

A report by the organization, due out this summer, will show that banks are "charging fees that are higher in price and more difficult to avoid," said Ed Mierzwinski, consumer program director at USPIRG.

The findings will look at 300 fees banks currently charge for items such as bounced checks and ATM use.

Critics say such fees undermine cross-selling efforts that are designed to bring in revenues by getting customers to buy more products. Instead, fees do little more than boost short-term profits.

In New York State, for example, the Public Interest Research Group and other organizations unsuccessfully fought the removal of a cap on what state-chartered banks could charge for bounced checks.

The $15 cap was abolished in April. Chase Manhattan Corp. quickly raised its $15 fee to $25. "It brings us in line with where everyone else was," said a Chase spokesman, citing $30 fees charged by local rivals that have national bank charters.

USPIRG's last nationwide survey on banking fees, in 1997, found that consumers paid $218.27 in annual account fees at big banks, and that 60% of banks required a minimum balance to avoid fees.

Multistate banks charged higher fees than banks located in a single state, the 1997 survey found. The annual cost of a regular checking account was $224.68 at a multistate bank, compared with $188.33 at a more localized institution. The bounced check fee at a multistate bank averaged $22.11, compared with $19.80 at a local bank.

Mr. Mierzwinski said the 1999 survey is expected to show price increases in those categories. "The big banks are fee makers," he said.

"These banks have benefited from advances in technology but have not passed those benefits on to consumers," he said.

Banks said the fees help defray costs and create a more level competitive environment. The fee war heated up in recent months in New York as the three biggest local banks introduced charges for use of their automated teller machines by nondepositors. Citigroup, Chase, and Bank of New York Co. all defended the fees, which range from $1 to $1.50.

"It was designed to ensure that noncustomers who were using our network would contribute to the significant cost of operations," the Chase spokesman said.

"We certainly have to position our businesses to be in line with the competition," said a Citigroup spokesman. Without the fee, "our machines would have been hit."

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