ATM Fees: Are they justified?

24 June 2015

Along with credit card interest rates, apparently Labor’s Sam Dastyari and the Greens’ Peter Whish-Wilson also want ATM fees to be investigated. Specifically, the $2-plus fees that can be charged when you withdraw cash from an ATM that is not owned by your bank.

So – are ATM fees too high?

Certainly a $2.50 cost would seem to be higher than the cost of facilitating the transaction, but to an extent it depends what costs that fee is meant to cover. Does it, for example, contribute to the cost of maintaining the physical ATM? The cost of restocking the ATM with cash (including the salaries of the attendant security guards). Does it recoup some of the cost of the technology?

Presumably, if a Senate inquiry is set up, these are questions that will be answered in due course.

How many ATMs? How many transactions?

According to statistics from the Australian Payments Clearing Association, there are currently 31,514 ATMs across Australia, with approximately 12,000 of those operated by the Big 4. According to statistics from the Reserve Bank of Australia (RBA) we made approximately 23.6 million cash withdrawals in April 2015 that were not from our own institutions ATM. This represented approximately 40% of all cash withdrawals – a percentage that varies by only one or two percent per month.

That’s a lot of people potentially setting themselves up for ATM fees.

How to avoid ATM fees

There are plenty of ways to avoid ATM fees, such as:

  1. Use your own network’s ATM. Yes, duh! It could be easier than you think though. As an example, all Westpac-owned institutions – which includes  Bank of Melbourne, Bank SA and St George – can use Westpac network ATMs for free. So if you’re with a “smaller” financial institution, check who really owns them. There may be a large free ATM network available.
  2. Get cash out elsewhere. Next time you’re at the supermarket, or buying something from, for example, Target, get some cash out. Just in case!
  3. Choose a transaction account that has wide (and free) ATM access. Some financial institutions offer transactions accounts that won’t sting you for using another bank’s ATM.

So don’t sit back and wait for a Senate inquiry – take your own action by a combination of savvy cash transaction to avoid your own fees.

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