While doing some calculations for my income taxes, I stumbled across the statement from my checking account for February 2006, just before my financial meltdown. Amused, I spent some time really looking at the staement when I noticed that there were several ATM fees on the bill and a few sales tax dings on those withdrawals. I added these fees and taxes up and gasped. The total was $30.28.
Why did you have all of those fees? Admittedly, my fee count was higher than most, but that was mostly due to traveling. I used several out-of-network ATMs that month, mostly to have cash on hand for incidentals, and the fees really began to add up.
The worst ones? I would withdraw $20, pay a $1.50 fee from that ATM’s bank, pay a $2 fee from my own bank, and pay a $0.14 sales tax on that fee. Total money lost on a $20 cash withdrawal? $3.64, or an 18.2% fee. That’s worse than buying something on a credit card and leaving it there for months.
Here are five tips for avoiding a pile of unnecessary ATM fees.
Use your ATM card (where you can) directly for purchases. Most ATM cards today are also check cards, meaning they work as credit cards almost everywhere. Instead of using an ATM card and suffering those fees, use your check card for the purchase directly and avoid the fees. The vast majority of banks provide this for free, so you should use it.
If you have other options to pay besides using your pocket cash, use it. I generally reserve cash itself for situations where that is the only solution (tips, paying the pizza guy, and such). Otherwise, I try to use my cards as much as possible. If I use a credit card for something, I make sure to pay off the balance ASAP.
Know your network. Most ATM cards have a network logo on the back so you can easily identify whether or not a given ATM machine can be used without fees. Know that logo so you can quickly tell if a given machine will work for you. If not, strongly consider other ways of making the purchase that you wish to make.
Keep some pocket money at all times. Don’t expect to spend this money unless you have no other choice. I usually keep a pair of twenties (and a few smaller bills) folded up in a back pocket of my wallet for such events; it’s generally out of sight and out of mind until a vital situation comes up.
Keep your head on straight when it comes to finances. If, after all this, you still feel the need to use an out-of-network ATM, use the ten second rule and consider whether or not the item you’re considering buying is really necessary. Could you live without it (and also without that extra ATM fee)? The answer is probably yes.