This fact sheet was written by William Kent Brunette for the Internet Consumers Organization.

Understanding ATM Surcharges

Millions of Americans have come to rely upon the thousands of self-service automated teller machines (ATMs) that are available in the U.S. and throughout the world. Many of these are located at financial institutions; others can be found in grocery and convenience stores, airports, hotels, work locations, shopping malls, gas stations, and other places.

Whether you are going around the corner, across the country, or to another part of the world, ATMs will likely be there to serve your needs. This is because many large financial institutions offer access to their ATMs throughout the states in which they operate. Even if you bank with a smaller institution, you probably have ATM access through a shared network (like the PLUS system) that links participating institutions.

ATMs offer convenience at your fingertips. They enable you to bank on your schedule, 24 hours a day/7 days a week. While permissible activities vary by institution, most machines let you get cash, make deposits, transfer funds, and obtain account information. In some locations, you can even bank in different languages at multi-lingual machines.

You decide how to use ATMs conveniently and cost effectively. You may enjoy the convenience of using the closest ATM even if this machine is not owned by your bank. And, you may be willing to pay a modest fee for such convenience. Or, you may wish to reduce or eliminate ATM charges. If you are in this later category, there are a number of things you can do.

Learn Your Account's ATM Fee Policy

Most financial institutions provide an unlimited number of free transactions to account holders who use their own bank’s ATMs. Some accounts offer a certain number of free transactions even if you use machines that are not owned and operated by your bank. Most institutions charge a modest fee to account holders who use ATMs owned by someone else. What’s more, the operator of this ATM may assess an additional charge.

Take Action

The best way to avoid paying ATM fees is to use your own bank’s machines. Consult the phone book, call an ATM locator hotline, or access your bank’s web site to find your bank’s nearest ATM.

If your ATM card is also a point-of-sale debit or check card (see below), use it to make purchases at merchants which display the symbols on the back of your card. Most supermarkets allow you to get cash back at the register without charging a fee.

If you routinely withdraw small sums, increase the amount you feel you can safely take out. This will reduce the number of trips you make to the ATM, reduce transaction fees, and simplify record keeping.

Use your bank’s toll-free number, PC- or Internet-banking services to accomplish non-cash transactions and avoid ATM charges.

Find The Right Account At The Right Financial Institution

Most people never incur ATM charges. If you routinely incur such charges, you may have the wrong account or may be banking with the wrong institution.

Given the wide variety of offerings today, shop around for an account that best suits your needs and lifestyle. Rather than sticking with an account you opened years ago, another account might better respond to your changed circumstances and provide greater free ATM usage. Also, some banks offer accounts with a limited number of free transactions at machines they do not own as well as other perks to special customers. These are people who maintain certain balances or who consolidate their financial activities (checking, savings, credit card, investment accounts; mortgage and other loans) at the same institution.

Some people live and work within a fairly close geographic area. Others cover a wider local territory or travel extensively. Take a look around you. Which financial institutions have ATMs or branches in locations that are most convenient to you (near your home, office, gym, church, favorite restaurants)? Which banks operate ATMs in frequent travel destinations? If your bank is across town, has a limited number of branches, or does not have ATMs near you, consider switching to a more convenient institution.

Other Considerations

While ATM pricing is important, other considerations include the following:

Do the financial institution’s ATMs offer the specific services you desire? Can you transfer funds between your checking and savings accounts? Does the financial institution provide a wide range of services?

Are the ATMs easy to use? Are the instructions simple and clear? Can you read the screens? If you are physically impaired, are machines fully accessible?

Can the ATMs be used in privacy? Could someone read your identification number as you key it in? With your PIN and ATM card, a thief can easily steal funds from your accounts.

Does the ATM take a photo of each use of the machine? This photo provides a record of people who make transactions and can be helpful if your card is lost, stolen, or used by someone without your permission.

Are the machines located in well-lighted areas or glass-enclosed vestibules that are accessible only to ATM cardholders? ATM location and placement are particularly important to people who use them at night or in certain areas.

ATM Cards That Function As Point-Of-Sale Debit Cards

Many ATM cards are now being converted into point-of-sale debit or check cards. This change substantially expands your card’s capabilities, usefulness, and acceptance. While these new cards will still be accepted at ATMs, they can also be used at stores that accept point-of-sale debit cards and major credit cards. Many institutions offer no-fee ATM, point-of-sale debit, and check cards to account holders.

Many national retailers, grocery store chains, fast-food restaurants, gasoline companies, and local merchants now allow you to select “credit” or “debit” when making a purchase. Credit means you are using your credit card; debit means you are using your point-of-sale debit or check card. From the look of the card to the way the transaction is processed, it seems just like a credit card sale. But, there is a big difference. When you charge something to your credit card, you are borrowing money to pay for the purchase. When you use your point-of-sale debit or check card, the purchase amount comes out of your bank account. If you do not trigger your overdraft protection, you will not pay a finance charge.

Debit cards are increasingly replacing checks as a payment device. They are more convenient, easier to carry, and more widely accepted than checks. You also do not have to wait for a check to be approved. Just present your card, sign your name, and be on your way. Record keeping is easier too. You get a receipt each time the card is used as well as a monthly statement detailing card activity.

Conclusion

In the future, the value of ATM, point-of-sale debit, and check cards will continue to increase. The latest generation of ATMs can read and cash checks, dispense concert tickets and coupons, sell stamps, and offer an ever-widening array of products and services. In addition, many federal, state, and local government benefit programs are moving toward dispersing benefits through ATMs and point-of-sale terminals. What’s more, you may soon choose to have an account at an “Internet bank” where you accomplish most transactions online and obtain money at ATMs.

As a consumer, you have a choice on how to use your ATM, point-of-sale debit, and check cards. Through your actions, you decide whether to incur ATM charges. By following these suggestions, you should be able to use your cards in the ways that are most beneficial to you.