If seeing a “cash only” sign causes you to roll your eyes and heave a heavy sigh, it could be because you’ve developed a healthy aversion to ATM fees.
And while other bank-related charges, such as overdraft and maintenance fees, appear to be decreasing , a recent study revealed that ATM fees are on the rise for the 14th year in a row.
With some advance planning and ATM location scouting, it is possible to avoid the fees. If you’re nowhere near your bank, in a pinch and strapped for cash, however, you may find yourself with no choice but to push the “Yes, accept charges” button. (Followed quickly by a muttered “Whatever.”)
What can be even more frustrating than paying the fee is not knowing how it’s used. Here’s a breakdown of how ATM fees are determined, who charges them, and where they go.
How ATM Fees Are Determined
There are just below 500,000 ATMs in America today, and 66% of them are run by independent operators and their affiliates—not banks. The typical ATM sees around 300 transactions per month, and the average withdrawal is $60 . Around 40% of Americans make eight to 10 ATM withdrawals a month.
If you use a bank-approved ATM, you’re not likely to incur fees. But if you don’t? You could be charged at least once to use the machine, and maybe even twice.
According to BankRate , the average all-in cost to use an ATM that’s not part of your bank’s network hovers at around $4.72. The fee breaks down into two separate charges:
This fee can be charged by your bank for using a non-branded or non-partner ATM. It’s kind of like going to a doctor that’s not on your insurance plan—you might be able to do it, but it could be more expensive.
This charge accounts for around $1.66 of the total fee, although some of the biggest banks can charge more. The fee can apply to any type of transaction performed at an ATM, including withdrawals, transfers, and even balance inquiries.
This one comes from the ATM owner, and is often seen as a convenience charge. The average U.S. surcharge is just over $3 , which is the highest in the country’s history.
Surcharges can vary by state and venue, and you may encounter higher amounts in places where ATMs are in greater demand. Detroit tops the list of cities with the highest ATM surcharges at $5.28, followed by Atlanta, Houston, Denver and Tampa.
And if you’re at an entertainment venue in a popular tourist destination, you could pay as much as $25. Ouch.
Foreign ATM Fees
Traveling overseas can come with even more watch-outs, such as currency-exchange math and foreign transaction fees on both purchases and ATM withdrawals.
Taking out money at a foreign ATM can incur a fee of around 1% to 3% of the transaction amount, but a growing number of financial institutions now offer no fees on foreign travel.
Who Owns the ATM?
America’s ATM population includes more than 13,000 financial institutions and around 200 independent service organizations (ISOs) and their affiliates. Ownership could be considered widely dispersed—out of all operators combined, 41% have fewer than 100 ATMs, including restaurants or stores that just have one ATM located inside their business.
ATMs that are run by banks or credit unions are either branded with the institution’s name and logo, or in a network of partner ATMs, such as Allpoint or Star . Many of these ATMs offer surcharge-free withdrawals for partner institutions, however banks may still charge non-network fees. Check with your bank for details.
ATMs that aren’t owned by banks or credit unions might be bought or leased either solo or as part of an ATM franchise. In these cases, profits are mostly tied to surcharges.
According to one ATM franchise operator, individual owners can set their own surcharge fees (up to their state’s maximum), and keep all income generated by the ATM. This also varies by franchise, venue and contract, however.
How to Avoid ATM Fees
If having to pay money to access your money grinds your gears, there’s some good news—it is possible to avoid ATM fees, or at least encounter them less frequently.
One way is to do some research on where your financial institution’s branded ATMs are located in your area, as well as their partner networks. Other ways to avoid ATM fees include using peer-to-peer payment systems or asking for cash back at a retail cash register when it’s available.
Players Changing the ATM Game
Ever since the first ATM was installed in London by Barclays Bank in 1967, automated-teller use has become ubiquitous. In fact, just over 50 years later, around 3.5 million ATMs are used around the world.
And just as they’ve evolved from only dispensing cash to performing more than 200 types of transactions, some innovative players are continuing to evolve their capabilities.
One tech trend that’s gaining popularity is the card-free ATM, which operates via a smartphone and digital wallet instead of a physical card.
Reimbursed ATM Fees With SoFi Money®
Online financial institutions, due in part to a business model that doesn’t have the operating costs of physical locations, are able to offer customers breaks on out-of-network ATM fees, with charges averaging around 11 cents per transaction.
Others, like SoFi Money®, a cash management account, reimburse 100% of all ATM fees (subject to change).
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SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank.