We’ve all been there – you need cash, but your bank doesn’t have an open branch anywhere nearby. Maybe it’s late, maybe it’s a holiday, or maybe you’re in an area where your bank simply doesn’t have any of its own ATMs. Either way, you have to make a withdrawal, and in the process you sigh a heavy sigh because $3 has just been taken from your account and sent into limbo in the form of ATM fees.
Charging for using an out of network ATM is typically common, and the average transaction usually costs the ATM user anywhere from $2.25 to $3 to gain access to their own money. But why do banks do this, and what can you do to minimize the damage?
Why An ATM Fee
There are a lot of reasons given for why out of network ATM fees exist. A common one is to cover operation and maintenance of the ATM. That’s a little murky, since ATMs cost less to maintain than having to keep a human teller in office to handle such simple transactions. At the end of the day, these fees are about profit, and banks recognize that.
ATM fees have gone up 21% in the past 5 years, which has a couple reasons behind it. First, ATM use is down overall. In a time where card is quickly becoming king, raising fees helps keep the bank’s pocketbook inflated. Additionally, growing bank networks through the expansion of major banks and partnerships between regional financial institutions means that even among those using ATMs, use of out of network ATMs is on the decline. Hiking rates helps counteract that.
Now think about how all of this really adds up. In 2013, Personetics found that consumers take out cash from an ATM every seven to ten days average. Assuming a withdrawal once a week and middle-ground $3 ATM fee, that’s $156 you’re paying just to get access to your own money if you have to use non-network ATMs. This amounts to millions annually even for smaller regional banks, is a service that can be run 24/7 without having to account for things like holidays, and comes with very little overhead for the financial institutions. Why do banks charge these fees? Because it’s money in their pockets with little to no work.
How To Avoid Them
The simplest ATM fee avoidance method is to stick to ATMs in your network. This isn’t always possible, though, but even with non-network banking, you’ve got some options. One option is to find an expanded network, looking at banks that have shared ATMs and services. Through partnerships, financial institutions agree to let their customer’s use one another’s ATMs without fees as a means of helping them compete with some of the big banks. This is common with regional banks as well as credit unions. It doesn’t even have to be your main bank account. You can have a small cash reserve in an account with a local bank backed by a good network, just in case you need it.
Try an online only bank, such as Ally, Simple, or USAA. Banks like this, that don’t have physical presences themselves, often refund ATM fees, since they know you have no other option but to use someone else’s ATM.
Use a branch locator. These days, many banks have mobile apps that can help you find the nearest ATM with a built-in branch locator. If you’re stuck in a cash-only situation, you don’t have to use the foreign ATM by the door. Just check your phone to see what’s nearby.
ATM fees don’t have to be a fact of life. With a little research, you can avoid them without problem, and without having to avoid the ATM altogether.