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ATMs let you have cash your way

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Ever go to the ATM needing just a few bucks and get frustrated it’s serving up nothing but twenties?

A couple of big banks are giving customers the option to withdraw bills in any denomination they choose. From Blake Ellis at CNN Money:

JPMorgan Chase & Co. and PNC have both been launching ATMs that churn out exact change to the dollar, allowing customers to withdraw denominations as low as $1 and $5.

Chase has rolled out between 350 and 400 such ATMs over the past 18 months, and the count is expected to double by the end of the year. Customers can type in the withdrawal amount, opt for “custom denominations” and select how many bills they want in denominations, ranging from $1 to $100.

The new machines, located within branches or drive-thrus, even have the capability of dispensing coins, a service that will be piloted soon and eventually rolled out nationwide.

According to the article, Chase’s rationale for the change is delivering better and more personalized banking service, without having to hire more tellers and other personnel.

It is a nice feature to offer customers. If your balance is low and you need to leave as much in your checking account as possible to cover outstanding charges on your account, even a few dollars can make the difference between overdrafting and not.

But I’ll bet it’s also a good way for PNC and Chase to increase fee income from their ATMs. Most consumers, if given a choice between an ATM that allows you to withdraw the exact amount you want and one down the block that makes you take out an extra $15, would choose the former. Banks typically charge nonaccount holders $3 a pop to withdraw money from their ATMs, vastly more than it costs to actually perform the transactions, so more nonaccount holder ATM customers means more fee income.

Chase and PNC’s adoption of this technology also illustrates one of the advantages of banking at a large bank. They have the money to invest in their physical infrastructure in a way that smaller banks and credit unions can’t.

How about you? Would you prefer to have the option of withdrawing smaller amounts?