Updated on 02.22.07

How My ATM Card Directly Cost Me $30.28 In One Month – And How I Avoid Such Mistakes Today

Trent Hamm

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.

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  1. If I need cash and am not near a WaMu ATM, I’ll look for a drugstore or grocery store. You can get cash back–usually up to $35 or even $50–for the price of a pack of gum. And you get to keep the gum.

  2. 6hand1 says:

    I totally agree with all the tips provided, but reality is that sooner or later…you’re going to be stuck in a position where you absolutely NEED cash, and there isn’t an ATM for your bank anywhere in sight.
    Tip: USAA has a sweet deal where they’ll refund you the first $15 per month in ‘other bank’ ATM fees. This policy has been in place as long as I can remember.

  3. Jorge Camoes says:

    You may not believe it, but here in Portugal we have one of the best ATM networks in Europe and, because of historical reasons, there is only one company managing it on behalf of all the banks. It would be very, very strange for us to have such fees and taxes for a simple withdrawal using an ATM card.

  4. Rebecca says:

    Silver Lining makes a great point. I was always trying to make my daughter understand how ridiculous it was to pay such a fee at an ATM when cash back was free. And there is always something you actually do need and will use from a grocery store or drugstore.

  5. VG says:

    I try to use my Visa/Mastercard everywhere. recently a local gas station said $3 min on credit card purchases, so I agreed and bought more stuff. (i usually buy green tea and cracker jacks for a lunch snack, comes up at about $2.15). So a little research and this is completely against Visa/Mastercard merchant agreements. Long story short, I went back, told them about this (even the page number in the own manual) and simply refused to budge. i could call in a complaint and force them to remove the sign, but whats the point, i just dont shop there anymore. i just didnt understand why they wouldnt just let their own rule slide for me to avoid the hassle. only 1 out of maybe 100 people have the guts to stand up to something wrong like that.

  6. I try to go with this advice, but it seems someone somewhere needs my available money even before I have a chance to spend it. To try to limit my ATM withdrawal fees and fees ATM machines charge for the service, I try to make a stop by a local bank where neither of the charges apply. i think i was in the same ballpark as Trent, around $30-$35 last week in ATM charges.

  7. Baba Ghanoush says:

    You’re not protected from theft if you’re carrying around a debit card. The $50 maximum limit on fraudulent charges to a credit card does not exist for debit cards, so they are much riskier.

    Choose a credit card with no annual fee, 25-day grace period, and either cash back or some other reward of use to you. Use it for all your day-to-day purchases, then pay it off *every month*. I’ve made several hundred dollars on my CC every year for the past few years with this strategy. The receipts also help you account for where your money goes, if you keep a record of them.

  8. Debbie says:

    I would never take out just $20, so my fee percentage would never be 18.2%. Whenever I get down to having just one or two twenties in my wallet, I withdraw $100 more. If I’m traveling (within the same country), I withdraw extra cash from a friendly ATM before I go. If I pull out too much, I can always put it back later.

    Two caveats: 1) I have good ATMs and even a branch of my credit union in easy walking distance of where I work. 2) If you’re the type to spend faster if you have more cash on you, you might actually save money by waiting until you want to get something and then withdrawing only a small amount. That $30 you paid in one month could definitely be less than the amount of frivolous purchases a person might make if they had extra cash on hand!

  9. Lisa Knight says:

    The reason for a minimum purchase is because small business owners are usually charged at a higher % on smaller purchases. I worked somewhere that our min was $10, I was given permission to be flexible, like $9.55 was ok…

    We stopped using our ATM cards on our joint account because it became too hard for me keep up with dh’s using it. He’d forget to tell me about a withdrawl & it would never fail that I would bounce a check & it’d end up costing us tens of dollars + the fee + the hassel…now I stick with my prepaid card that I can fund via electronic transfer. Otherwise I use only cash.

  10. Dannyboy says:

    Paypal always has better rates than ING, ususally by about 1/2%.

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