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ATM charges 3 percent for cash

By Claes Bell, CFA · Bankrate.com
Tuesday, January 17, 2012
Posted: 3 pm ET

Withdrawing money an ATM not owned by your bank has never been cheap. But now, ATM providers have new way to make sure they maximize the fees you pay for withdrawals.

From Felix Salmon of Reuters:

Paul Volcker likes to say that the only worthwhile financial innovation of the past 20 years has been the ATM. So I suppose it was only a matter of time before that, too, was rendered evil.

Here, courtesy of Peter Eavis, is how the ATM at the Holiday Inn in Orlando now works -- it doesn't just charge $3 per withdrawal, but rather the higher of $3 or 3%.

ATM fees have been climbing steadily ever since Bankrate first surveyed them in 1998, when the average out-of-network withdrawal would cost you 89 cents. The rate of increase has been, at least in recent years, about in line with inflation.

But if it gains widespread traction, this method of figuring ATM fees will amount to a gigantic fee increase for anyone withdrawing more than about $100. For many ATMs, a common cash withdrawal limit is $400; to make that withdrawal under the above terms would cost you $12. And that's not including whatever your own bank charges you for an out-of-network withdrawal.

What do you think? Is charging a percentage of large withdrawals reasonable? Would it discourage you from taking cash out?

Follow me on Twitter: @ClaesBell

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29 Comments
LJH2100
February 18, 2012 at 11:05 pm

I don't personally use cash very often. However, I think some of the posters who are asking who uses cash overlooked the location of the article's ATM. A hotel in Orlando. A family vacationing at Disney might want to withdraw cash after their arrival to disperse to the family for purchases in the park. I don't think the % method will catch on widespread, but it may catch on for theme parks, casinos, and the like, where people are already willing to pay more for convenience (sort of like how food is overly expensive in the same type of venues).

Tom
February 17, 2012 at 10:40 pm

I rarely make cash withdrawals and pay with my debit card at checkout. If I need cash, the supermarket chain where I do most of my shopping owns a bank and has a no fee ATM for cash withdrawals.

My credit union doesn't charge for ATM withdrawals or debit card use.

Tizzielish
February 17, 2012 at 7:20 pm

As another comment points out, I get cash when I get prescriptions filled or buy groceries. These stores do not, at least not yet, charge me for cash back.

I maintain a checking account in another state than the one I live in. Everyone needs some cash now and then, because not all businesses take debit/credit cards, like at the farmers market. I guess the farmers market is where I mostly spend my cash.

Sometimes I go to Trader Joe's primarily to get cash back. And I can always pick up something I need. And consider this: spending a buck for a small chocolate milk will get me cash back at Safeway and that is less than any ATM fee. But I don't shop Safeway anymore.

John
February 16, 2012 at 3:02 pm

I am fortunate that my bank (USAA) doesn't just not charge a fee but they refund fees charged by other banks (there's a limit but I've never hit it). Still, I don't want to abuse the privilege so I always seek out ATMs with reasonable fees. $3 I might allow for by 3% is definitely too much.

Dan
February 15, 2012 at 10:29 am

This is going to be a repeat of the payphones where there was only one long distance carrier allowed and they charged $8 for what should have been a $1 call....and they will not clearly state this.

The charge should be clearly posted on the ATM, and be a set amount for a withdrawal..this is like a private utility (like pay phones) and rates should be regulated.

This is going to lead to serious abuses....

Bill
February 14, 2012 at 9:43 pm

Short of a life threatening emergency I would NEVER use an ATM that charges a fee. The banks use ATM's to replace tellers who would be paid salaries to do the same job, why would I PAY to use something that at least in theory is already making the bank money?

Christian Talavera
January 18, 2012 at 11:37 pm

This shouldn't a big issue, people can just use the cash back option at retailers, avoid any fees that way period.

Beavis
January 17, 2012 at 7:27 pm

ppl use ATMs still? I have only used them a few times in my life & not for many years. No need for much cash & if it is needed just get some back when you charge something at the store.

Eric
January 17, 2012 at 5:54 pm

Who uses cash any more anyway? I haven't had an atm or debit card in over 5 years, haven't missed it. I do carry a couple credit cards, but I don't ever have more than $100 cash on me and have never had a problem......

johnharry
January 17, 2012 at 5:26 pm

every where i go, i search for a no fee Navy Federal Credit union ATM, or a free pardner. member since 1986