The ABCs of avoiding ATM fees

0 Comments | Oakland Tribune, Aug 1, 2008 | by Eve Mitchell

No doubt, ATMs do make life easier. But they can also make life a little more expensive if you don't have a strategy for avoiding costs that can occur when you withdraw money from an ATM outside of your bank's network.

Such fees add up to an estimated $4.4 billion in ATM annual surcharges and out-of-network fees, according to Bankrate.com.

Financial institutions impose an average surcharge of $1.78 on non-customers who use the bank's ATMs to withdraw money, according to Bankrate.com. That's on top of the average $1.25 fee charged by the customer's own bank for going outside of the ATM network to withdraw money.

"The good news is that these fees are easily avoided," said Greg McBride, senior financial analyst for Bankrate.com.

One way to avoid getting hit with ATM costs is to belong to a financial institution that is part of a surcharge-free network such at Allpoint, CO-OP, or STARsf, experts advise.

"A lot of small institutions such as local community banks and credit unions that do not have large ATM networks have joined ATM alliances," said McBride. "For the (member) institutions, it really levels the playing field in terms of competing against large banks that have far-flung ATM networks."

Such networks provide free access for customers of member banks and credit unions to thousands of ATMs nationwide, including many located in gas stations, supermarkets, and other retail outlets.

Among the California-based credit unions and banks that belong to the Allpoint surcharge-free network are Technology Credit Union, Chevron Federal Credit Union, OneCalifornia Bank and Affinity Bank.

The Allpoint network gives Tech CU customers access to more than 32,000 ATMs nationwide.

That number is in addition to some 25,000 surcharge-free ATMs that are part of the CO-OP network and a small number of Tech CU- owned ATMs operated in its branches and in some workplaces.

"We wanted to go beyond the CO-OP network. They are primarily located at other credit unions. What's really nice about the Allpoint network is where they are located," said Kathleen Litman, vice president of marketing at San Jose-based Tech CU. "They are at Targets, RiteAids (and other retail locations). Where you normally do your shopping, now you have a place to get cash. It's consumer friendly that way."

Typically, larger banks are more likely than credit unions and smaller banks to have ATM fees and surcharges, observers say.

Bank of America increased its surcharge last summer from $2 to $3 for non-bank customers who withdraw cash from its network of ATM machines.

A $2 fee also applies to Bank of America customers who take money out from an ATM outside of its network.

Wells Fargo charges non-customers a $2.50 surcharge for using one of its ATMs while a $2.50 fee applies to Wells Fargo customers who use an ATM machine outside of the bank's network. (see breakout).

Banks say the surcharges are needed to recover costs associated with non-customers who use their ATMs.

"It's a consistent and significant investment we make in the ongoing development of this huge national network," said Tara Burke, spokeswoman for Bank of America. "We believe it is appropriate to charge a reasonable (surcharge) to non-customers to access the convenience of our network."

The most obvious way to avoid ATM costs is to go to your own bank for ATM withdrawals.

"Banks provide free access to their ATMs so the key is to plan ahead as to when and where you make withdrawals," said McBride.

In addition to joining a surcharge-free network or using your own bank's network, there are others way to avoid ATM fees, he said.

Look for a financial institution that doesn't charge fees for using an ATM outside of their network. Also, some financial institutions, including some Internet-based banks, may have policies that provide for reimbursement of surcharges.

Another way consumers can avoid ATM fees is to take advantage of point-of-sale terminals located in stores and post offices. Most point-of-sale terminals provide cash back at no charge when a purchase is made.

"Whenever I am on the road, I go to a store and buy a small item and get $50 back," said Shirley Dean, education director for Consumer Credit Counseling Services of the East Bay.

And even if you bank where there are costs associated with using ATMs outside of a network, good old-fashioned planning can help avoid these charges.

Consumers should check their bank's Web site to find out where bank-owned ATMs are located near your job, home or commute route, said McBride.

"It's helpful to know to know the locations of ATMs and plan ahead so you don't get caught having to make that withdrawal on somebody's else turf," he said. "Consumers need to take the initiative to do what they can to avoid the fees."

Eve Mitchell covers personal finance. Reach her at 925-952-2690 or emitchell@bayareanewsgroup.comTips for avoiding atm fees

-- Plan ahead: Try to calculate how much money you will need each week and plan to make one ATM stop to cover those expenses. -- Change banks: Try to find a bank that doesn't charge you a fee when you use an ATM that is not in its network. As a general rule, smaller banks and credit unions are less likely to charge this fee than larger banking institutions. -- Credit union or community banks often have free ATM networks: That means you can use the ATMs for no money at various banks, credit unions and other independent spots. - - Try an online bank: More and more online banks and brokerage firms now offer surcharge-free access to other banks' ATMs (or will refund any surcharge applied) to remain competitive. -- Get cash back at stores: To get around paying ATM fees, you may be able to ask for cash back when using your debit card while shopping. Be aware that some banks have begun to charge a fee for this service. You can check your bank statement to see whether your bank charges a fee when doing this. If they do charge a fee, another option is to write a check for a certain amount above the purchase price and ask for cash back.