According to a new survey released by Bankrate.com, out-of-network ATM withdrawal fees climbed to an average of $4.86—1.9% a year from $4.77 last year—the highest average fee Americans have ever faced in out-of-network ATM prescriptions. Consumers who are often quite reliant on non-bank ATMs receive little consolation from this news, however, since these charges keep rising steadily.
Steady incline for almost three decades
It is almost an uninterrupted climb from Bankrate’s initial monitoring of fees for ATM withdrawal in 1998; out-of-network fees have always shown an upward trend. In the late 1990s, most consumers probably paid less than $2 per transaction. Over the years, banks and operators incrementally increased fees to cover rising maintenance costs, regulatory compliance, and investments in security upgrades. Obviously, the increase from $4.77 to $4.86 within just a year seems like nothing compared with the continued series of gradual increases pushing prices to a new height every few years.
Here are a few factors sustaining that constant increase:
- Rising costs of operations: Replacing aged ATM hardware, upgrading software, and enhancing security against skimming and fraud, all add to overheads.
- Declining ATM usage: Fixed costs spread over fewer transactions require operators to share the burden of fewer transactions as consumers increasingly adopt digital wallets and mobile payments, reducing ATM transactions.
- Interchange fee adjustments: Banks renegotiate periodically their fees for each other when their customers use out-of-network machines, and these costs are often passed down to consumers.
Geographically different fees
Not all Americans are charged the same fee; there are some fees that vary from region and operator. For example, urban areas with high traffic may charge more on the grounds of valuable real estate prices and a higher demand, while sometimes rural communities, where ATMs are scarcer, charge higher prices on account of the lower transaction volume.
- Coastal metropolitan areas: Cities like New York, Los Angeles, and Miami usually have fees exceeding $5 per withdrawal because they have very congested networks but also very high business pressures.
- Suburban and small-town ATMs: Fees in this category are usually around $3.50 and $4.50, depending on the pricing strategy of the hosting institution.
- Remote locations: In some of these areas, where banking infrastructure is poor, consumers may incur charges of more than $6 for one out-of-network withdrawal.
Regional regulation of ATM norms would prepare travelers moving around so they can avoid sticker shock.
What out-of-network fees add up to
Out-of-network fees are only part of what someone pays to access cash. Customers may also incur:
- Fees imposed by the owner of the ATM
- Foreign transaction fees for withdrawals abroad
- Currency conversion charges when using international ATMs
These charges can quickly build up. For instance, a traveler who uses an ATM abroad for the first time can incur an out-of-network charge of $4.86, in addition to a foreign transaction fee of 3% of the amount of the withdrawal and a currency conversion fee of 2%. This makes the total quite hefty.
Strategies to avoid fees
Record-high fees invariably come with a host of strategies by consumers to minimize their trip to the bank out-of-network ATM fees;
- Use in-network ATMs whenever possible. Almost all banks and credit unions belong to shared ATM networks such as Allpoint, MoneyPass, or the CO-OP Network, which provide members with thousands of locations without a fee.
- Make smaller and infrequent withdrawals. Combining cash needs into a few transactions reduces the number of fees paid.
- Use bank reimbursements. Many checking accounts and premium credit cards reimburse some fees charged by ATMs but only up to a limited dollar amount within each month.
- Use cashback at retailers. Grocery stores, pharmacies, and big retailers frequently offer a fee-free cashback opportunity when a customer makes a debit card purchase in their institutions.
- Switch to no-fee banks. Increasingly, online banks and fintech firms are marketing free withdrawals from other banks as part of the feature of their accounts.
Digital payment options are gradually filling the gap that cash was once thought to be a very integral part of; well, cash remains a vital resource for many Americans, especially the unbanked and underserved areas and patrons of small businesses, who prefer to conduct cash transactions. Such record ATM fees harm such customers most, and purchasing power diminishes, and they may even be forced into the use of high-priced alternatives like payday loans or prepaid cards carrying hidden fees.
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