Do you use an automatic teller machine (ATM) regularly? If so, ATM fees could be taking a big bite out of your checking account - and that just isn't necessary.
The year 2019 marked the 50th anniversary of the ATM. For many consumers who've gone to cashless payments, those machines are over the hill at 50.
For other consumers, ATMs are still a regular lifeline to their bank accounts. The problem is that ATM fees reached a new high in 2019 also.
Avoiding those fees does not mean kicking the ATM habit. It just means making the right choices about which machines you use.
What Are the Options for Free ATMs?
Fortunately, you have options. Many banks offer free ATM access, as long as you use the right machines. Others even reimburse their customers for ATM fees, regardless of which machines they use.
There are three options for how to get around ATM fees:
- Choose a bank with an extensive branch network
- Choose a bank that is part of a major ATM network
- Choose a bank account that reimburses ATM fees
Any of these options gives you almost unlimited access to your money.
This article looks at each of those options for avoiding ATM fees, so you can make a choice that saves you money without costing you any convenience.
What's At Stake: The Cost of ATM Fees
First of all, how much do ATM fees really matter?
You might be surprised. While most banks offer free ATMs, this generally only extends to specific machines. Free ATM access may depend on your using a machine operated by your bank or one that is part of a network to which your bank belongs.
Otherwise, if you use the wrong machine, you pay not once, but twice each time you access your money.
First of all, if your financial institution doesn't have a relationship with the operator of the machine you use, that operator will charge you a fee.
Second, your bank will likely charge you with an additional fee for using an out-of-network ATM.
As of the August, 2019 MoneyRates Checking Account Fee Survey, the average fee ATM operators charged for non-customers who used their machines was $2.87. The average fee banks charged on top of that when their customers used an out-of-network ATM was $1.74.
That totals $4.61 every time you use your ATM. If you're one of those people who draws weekly spending money from an ATM, using the wrong machine could cost you nearly $240 a year.
That's a cost well worth avoiding.
Banks with Extensive Branch Networks
One way to avoid using an out-of-network ATM is to choose a bank with a large number of branch locations. In this sense, the biggest financial institutions have an advantage.
There are four financial institutions in the United States which offer retail deposit accounts and have over $1 trillion in deposits. Here are profiles of the location distribution these mega-banks offer in terms of both ATMs and brick-and-mortar branches:
JP Morgan Chase
Total deposits: $1.6 trillion
Total U.S. branches: 5,037
Number of states with branches: 35
Number of ATMs: 18,623
Drawbacks: No free checking except for student accounts. Overdraft fees are higher than the industry average. Savings account rates are less than 1/40th of the industry average*.
Bank of America
Total deposits: $1.4 trillion
Total U.S. branches: 4,285
Number of states with branches: 37
Number of ATMs: 16,062
Drawbacks: No free checking, and overdraft fees are higher than the industry average. Savings account rates are less than 1/14th of the industry average*.
Total deposits: $1.3 trillion
Total U.S. branches: 5,503
Number of states with branches: 42
Number of ATMs: 12,800
Drawbacks: No free checking except for youth accounts. Overdraft fees are generally higher than the industry average. Savings account rates are less than 1/40th of the industry average*.
Total deposits: $1.07 trillion
Total U.S. branches: 711
Number of states with branches: 13
Number of ATMs: 3,200
Drawbacks: No free checking except for student accounts. Overdraft fees are higher than the industry average. Savings account rates are less than 1/10th of the industry average*.
Two things to notice about each of these mega-banks:
- Despite their size, none of them is in all 50 states
- All offer less favorable checking and savings account terms than most banks.
So, while going with a very large bank is one way to avoid ATM fees, it is not a perfect solution. Fortunately, there are other options.
(* According to the America's Best Rates survey, the industry average APY is 0.439%)
Major ATM Networks
Not every bank can have a large number of brick-and-mortar bank branches spread across the country, but ATM networks are a great equalizer.
ATM networks have usage arrangements with ATMs around the nation. Banks can sign up for one or more of these networks to offer their customers the wide geographic reach of much larger financial institutions. So, if you are a regular ATM user, find out if your bank belongs to any of the following major ATM networks:
- Allpoint - This subsidiary of Cardtronics has a network of 55,000 ATMs located in the United States, Canada, Mexico, Australia and the United Kingdom.
- MoneyPass - This subsidiary of Fiserv offers a network of 32,000 ATMs located across the United States.
- NYCE - This ATM network is operated by banking and payments technology company FIS and has thousands of locations across the United States.
- Pulse - This ATM network is part of Discover, and offers half a million locations in the United States and over 2.1 million ATMs across 134 countries.
- STAR - This network is operated by First Data and has locations in all 50 states.
ATMs are generally prominently marked with the names of any networks to which they belong, and some machines may belong to more than one network. This can make it easy to find free ATMs to use, as long as your bank belongs to a major network.
Banks that Reimburse ATM Fees
Online-only banks do not have physical branch networks on which to rely, and some pass on joining ATM networks in favor of reimbursing ATM fees.
The following is a review of how some of the largest online-only deposit institutions handle ATM-fee reimbursements:
- Charles Schwab Bank offers unlimited ATM fee reimbursements for cash withdrawals made using the Schwab Bank Visa Platinum Debit Card.
- Ally Bank offers free usage of any ATM in the Allpoint network, plus it will reimburse up to $10 per statement cycle for fees incurred at other ATMs.
- Capital One Bank will reimburse up to $15 per statement period for fees incurred at any ATM within the United States and for some ATMs outside the U.S.
- USAA Bank has a network of 60,000 ATMs which its customers can use for free, and it will also reimburse up to $15 in fees for use of out-of-network ATMs.
- Discover Bank offers free withdrawals from a network of 60,000 ATMs nationwide.
As the above examples show, even banks that don't have brick-and-mortar locations can offer you the convenience of free access to your money at a wide variety of locations. However, it is important to check an online bank's ATM policies before you sign up.
Strategies for Minimizing ATM Fees
Based on the above options for free ATM usage, here's a summary of strategies for minimizing ATM fees:
- Join a bank whose branches or ATM network fits your movements
If you are thinking to join a bank with a large number of locations, just check how convenient those locations will be to places you visit frequently.
- Use a bank that reimburses ATM charges
Large ATM networks are a big help in avoiding ATM fees, but ultimately a bank that reimburses ATM charges even from out-of-network machines might offer the greatest freedom of choice.
- Wean yourself off cash
Society is increasingly transitioning to cashless payments. Simply using your debit card or other form of electronic payment can save you the worry about where to find free ATMs.
- Plan before you travel
The most expensive ATM fees are often in areas like airports and hotels that cater to tourists. You also may have more trouble finding an in-network ATM when you are in an unfamiliar location. So, it may pay to stock up on cash before you leave for your trip.
- Look for the label
When using an unfamiliar ATM, don't just blindly assume it is in your bank's network. Before you put your debit card in a machine, check whether it displays the name of an ATM network to which your bank belongs.
- Use an ATM locator app
Many banks and ATM networks now have mobile apps that will help you locate ATMs you can use for free. This kind of app can help you avoid ATM fees no matter where you happen to be.
Following these strategies to minimize ATM fees is easy and makes good sense. After all, it's your money in your checking account. It seems a shame to have to pay just to use it.