North Carolina credit unions have begun a campaign to win the hearts- and possibly the wallets-of bank customers by offering surcharge-free ATMs.

The credit union league in North Carolina has pulled its membership together to offer consumers free use of about 650 automated teller machines across the state, regardless of where they bank.

"The idea is, if you have an account at Wachovia, you can come to any of our ATMs, and we won't charge a fee," said Larry Johnson, president of the North Carolina Credit Union League.

The antipathy between credit unions and banks is arguably greater in North Carolina than in any other state. That is largely because a recent Supreme Court ruling limiting credit union expansion had its roots in a lawsuit brought by a group of the state's banks.

Moreover, with industry giants like NationsBank Corp. and First Union Corp. based in North Carolina, the state is increasingly seen as a banking powerhouse.

Much to the consternation of those banks, North Carolina's credit unions have been running advertisements and making city-by-city announcements about the fee-free ATMs, generating attention from television and newspapers.

"Our interest is in the consumer. There has been a public outcry and concern about the escalating fees in the marketplace," Mr. Johnson said.

"The ultimate goal here is to inform consumers where they may obtain financial services at an affordable price," he said.

But Paul Stock, executive vice president of the North Carolina Bankers Association, said the credit union group has other goals as well.

"The well-financed and very aggressive campaign being orchestrated by the credit unions in North Carolina is clearly aimed at building support for their position in Washington," said Mr. Stock.

The campaign comes as the U.S. Senate debates legislation that would allow credit unions to open their doors to expanded memberships. "This does help us to be seen in a very positive light," Mr. Johnson acknowledged.

Mr. Stock said his group had no plan to counter the no-fee campaign. Credit unions' nonprofit status consistently allows them to undercut commercial bank pricing, and there is little the industry can do to change that, he said.

Despite the fact that he and other banking industry representatives are working hard to defeat the legislation pending before the U.S. Senate, Mr. Stock said he believes the credit unions will prevail.

As a result, he said, he finds the campaign in North Carolina a bit surprising.

"I don't understand why they're doing it. Maybe they sense a weakness in their position that we don't see," he said.

The North Carolina group is not alone in its development of a free ATM network. In California, for instance, a large network of credit unions has joined forces with banks to form extensive surcharge-free ATM networks. Similar joint credit union-bank initiatives are gaining ground in other states as well.

"There are pockets of credit unions around the United States that are doing away with surcharges," said Rae Miles, vice president of business development at the Credit Union National Association. "There is evidence that by not surcharging you can attract customers from other institutions."

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