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How to Avoid ATM Surcharge Fees

January 15th, 2008

atm-surcharge-fees.jpgWhile most of us enjoy the convenience of withdrawing cash from an ATM when we need it, many such machines have begun charging significant fees for their use unless you happen to be a customer of their associated banks. For example, I noticed that Bank of America has recently raised their fees for each ATM transaction made by non-customers from $2 to $3. While this may not seem like much, it can add up over time and become an annoying extra expense to keep track of when trying to manage your finances.

Fortunately, there are an increasing number of banks that will reimburse such fees to your account even if you use non-affiliated ATMs. One such institution is USAA Federal Savings Bank. I have had an account with USAA for over three years now, and know from personal experience that they always rebate ATM surcharges at the end of each month regardless of which particular machine you use. The only caveat is that the rebate is limited to a maximum of 10 withdrawals or $15 per month, whichever happens first. However, I have never used ATMs frequently enough to exceed these limits, so this has never been a problem.

In this article, I will provide a list of other banks that either offer no fee ATM transactions at their machines or reimburse fees like USAA does. I will also answer some ATM-related questions that you may have, and then finish the article with a few tips on how to avoid ATM fees altogether.

What does ATM stand for?

ATM stands for Automated Teller Machine, also known as Automatic Teller Machine. It is a computerized bank terminal that is designed to accept cards with your account number and PIN (Personal Identification Number) on them, which are usually encoded with a magnetic stripe. Such machines have the ability to dispense cash, take deposits, and perform a few other basic banking functions such as transfers between accounts or information about current balances. Although the term “ATM machine” is actually redundant, I have used it a few times in this article because it appears so frequently in search queries.

What is the total number of ATM machines in the United States?

According to the American Bankers Association, there were approximately 395,000 ATMs in the United States as of 2006. In that year, they processed over 10.1 billion transactions.

Why do ATM machines eat your card?

Occasionally, ATMs have been known to “eat” cards in certain instances, which understandably frustrates their users. This usually happens for one of the following reasons:

1. Some ATMs are programmed to seize the card if the user enters the PIN incorrectly three times in a row (the dreaded “three strikes” rule).

2. In some locations, the ATM will eat your card if you do not retrieve it within a certain time period after fully completing a transaction (15 seconds for some machines, but this may vary).

3. In a few cases, cards have been eaten because the user had insufficient funds in the account or was trying to initiate a fraudulent transaction of some sort.

4. Sometimes the ATM simply malfunctions and keeps the card when it is not supposed to, in which case you can attempt to get it back by notifying the relevant bank. I read about one case where this happened and the bank personnel eventually had to pry the ATM open to get the card back, after which the renegade machine continued to eat the cards of subsequent customers.

What is an ATM PIN reversal? Is this a scam?

This is a concept that has been propagated by forwarded emails claiming that you can enter your PIN (Personal Identification Number) backwards at an ATM machine in order to secretly summon police. Supposedly this can help you in the event that you are being threatened by a robber while in the process of withdrawing cash. However, this idea was never actually implemented by any banks, although there have been a few proposed bills in state legislatures referring to the idea of such a system. While technically not a scam, it has become known as an urban legend that is not really true. Both scopes.com and scambusters.org have confirmed that emails claiming that this is true are bogus.

What is ATM receipt advertising?

If you have ever purchased grocery items from a supermarket and looked on the back of your receipt, you may have noticed coupons or other types of advertising printed there. Recently companies such as Strategic Alliance Group have started offering this same kind of advertising opportunity for ATM receipts. The idea is that many ATM customers will keep their receipts for at least a few days so that they can use them to reconcile their bank statements for the current month. Picadilly Restaurants is one of the major companies that are using this form of advertising. They offer $1 off coupons on the back of the receipts and are currently reporting a redemption rate of 0.625%.

OK, so where can I find a no fee ATM?

Here is a quick list of banking companies that either do not charge fees at all or reimburse you for them later so that ultimately you do not have to pay anything. Meanwhile, if you happen to know of any other banks that would fit this category, please mention them in the comment section so that I can add them to the list.

ING Direct - If you have an “Electronic Orange” account with them, you can use any ATM within the AllpointTM Network completely free of charge.

Bank of the Internet - Will reimburse all ATM fees up to a limit of $6 per month.

First Internet Bank - Also rebates up to $6 per month of ATM fees as long as you have a savings account or interest bearing checking account.

Founder’s Bank and Trust - Headquartered in Grand Rapids, Michigan, they now offer full online banking services and will even allow you to open accounts from any location. They will reimburse ATM fees too, as long as you don’t go over four transactions per month.

NetBank - Internet-only bank that allows ATM fee rebates, but only up to $3.50 per statement cycle.

E-Trade - Although better known for online stock trading, they also offer banking services. Some of their accounts such as the “Max Rate” checking one come with unlimited rebates for ATM surcharges. However, in the event that you make an ATM transaction in a currency other than U.S Dollars, there will be a 1% fee.

Charles Schwab Bank - Another banking service company that is better known as an investment firm, their Internet bank now offers unlimited ATM surcharge rebates on checking accounts. Some restrictions may apply, so it’s always a good idea to read the fine print before you sign up.

What are some other ways I can avoid those annoying ATM surcharge fees?

In addition to looking for banks that rebate or do not charge ATM fees, there are a few other money management strategies that you can use to save money and streamline your budget when it comes to banking services:

1. If possible, use an ATM that is affiliated with the same bank as your account. Traditionally, almost all banks will let you use their ATM machines without fees as long as you are a customer with them. Of course, in many cases this is not possible or would be very inconvenient, so let’s look at some other options…

2. Limit withdrawals to significant amounts instead of making lots of small ones. As you can probably tell from the above list, many banks will rebate fees, but have some type of maximum monthly limit for fee-free transactions. Therefore, if you can limit the number (but not necessarily the dollar amount) of withdrawals that you make each month, you can often avoid fees altogether. Instead of getting cash out of the ATM every time you go shopping, just withdraw all of the cash you will need for one week or more beforehand and save yourself the hassle of frequent ATM visits. You can also use such a strategy to manage your money more wisely and eventually cut down on unnecessary expenses.

3. Use your debit card to get cash back. Most banks offer some type of debit card that can be used at an ATM but can also be used as a credit card to make purchases. You can use this latter ability to get cash back after buying something by paying more than the purchase amount (usually this is allowed in increments of $20). I have seen my mother use this trick in the past to get small amounts of cash without having to make a separate trip. It is effectively the same thing as an ATM withdrawal, but you don’t have to pay any extra fees for it. Additionally, some banks such as USAA even have reward programs that will give you small cash rebates each month for making purchases through the debit card. These amounts are added to your account balance each month on top of any ATM surcharge rebate that you may receive.

4. Open a dedicated ATM account. If you find a convenient local bank that offers free ATM transactions but lacks other features that you are accustomed to having with your current bank, you can open a separate account to use for withdrawing cash. You can also use such an account for depositing small checks or excess coins. If your main bank offers free online money transfers to other banks, this is another possible funding option.

Although every person’s situation is different and “one size fits all” solutions rarely work, our current financial markets offer a pretty good range of options as long as you’re willing to shop around. With a little bit of resourceful thinking, you can easily avoid annoyances such as ATM surcharges. Hopefully these tips will help get you started in the right direction.

Helpful Resource Guide: How to Save Money on ATM and Other Bank Fees

8 Responses to “How to Avoid ATM Surcharge Fees”

  1. comment number 1 by: Kate Rosenberger

    Great tips! Click on my name for a link to my article on more ways to avoid ATM fees.

  2. comment number 2 by: Walter Lewis

    All points atm’s claim to be surcharge free for its customers but i have’nt tried one before but i plan to try it later tonight and will let you know

  3. comment number 3 by: Anonymous

    td bank offers all atm fees rebated if you keep a monthlyy balance of 2500.00

  4. comment number 4 by: Marcus

    Interesting that you define ATM as Automated Teller Machine, then continue to non-stop call it an “ATM Machine” - Automated Teller Machine Machine?? Wouldn’t that be an ATMM? After working in a bank for 10 years, my favorite was when someone would tell me they forgot their personal PIN number to the automated ATM machine - the PPINN to the AATMM i guess. give it a couple years and it will be the AAAAATTTMMMM i suppose. Laziness meets ignornace - its a far less beautiful thing than one might imagine.

  5. comment number 5 by: Karlonia


    I was already aware that “ATM machine” and “PIN number” were redundant phrases. Their use in a few of the boldfaced subheadings was intentional. Note that the article acknowledges this in the last sentence of the paragraph under “What does ATM stand for”:

    “Although the term “ATM machine” is actually redundant, I have used it a few times in this article because it appears so frequently in search queries.”

    The reason that I went ahead and used the terms anyway has to do with something called search engine optimization (SEO). Because there are so many people typing things like “ATM machine” into the search box instead of just “ATM”, it was important for me to include the redundant phrases somewhere in the article so that the search engine crawlers would pick them up and give the article a higher ranking for these keywords. This is a necessary step in getting the searchers here in the first place — after which I am hoping that they will actually READ the article and see the part where I state that these popular phrases are actually redundancies.

    Meanwhile, several months after this article was posted, I wrote this one on avoiding redundant words and phrases. Interestingly, I managed to include both of your pet peeve phrases in there :)

  6. comment number 6 by: Frank

    There are two other places that are FEE FREE ATM’S, Not located in a bank but in WAWA and Quick Check stores. The two stores are letting you use the ATM over in there store for no charge. “Your bank may charge a fee” Not all WAWA and Quick Check Stores do this, but close to all of them. Depending on what state you live in.

    And another example:
    PNC ATM is located in a WAWA store, you have a PNC Bank ATM. NO Charges all around.

    Go out to West section of New Jersey and WAWA there have Bank of America ATMs.

    Use the Locate button on your banks website to locate the best area for your ATMs locations. That is how you save money.

    The Lowest rate of ATM’s fee is the Hudson City Savings Bank located in New Jersey. There fee is only $1.00. When using another’s ATM.
    Not to sure how much to use their atm machine with a different banks atm card? I still believe that is only $1.00 to maybe $1.75.

  7. comment number 7 by: M Johnson

    All 7-Eleven stores in Oklahoma offer fee free ATMs

  8. comment number 8 by: Marnilla T.

    Financial institution fees, for instance ATM fees charged to people that use an automatic teller machine out of their banks’ network, are not exactly the most popular thing in the world. Hardly everyone will say that they gratefully pay them. However, people are doing something about it. Financial institutions nationwide are being slapped with lawsuits over how they assess their fees.

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