Rising ATM fees are making it more expensive for consumers who regularly use an out-of-network ATM to withdraw cash. The trend may be the push that some consumers need to find a better checking account or bank.
In the past six months, three of the nation's largest banks -- Bank of America (BAC), Citibank (C) and SunTrust Bank (STI) -- have each hiked their out-of-network ATM fee from $2 to $2.50. At the top 10 U.S. banks, the average out-of-network ATM fee is $2.45, up from $2.25 in November. Then, don't forget that ATM operator also has the right to slap on a surcharge, usually around $3 to $5.
If ATM fees are becoming a costly expense for you, here are some ways to avoid them:
Find your bank's ATMs on your smartphone. The biggest reason we resort to using an out-of-network ATM is because ATM machines from our banks are nowhere to be found when we're in a rush. In many cases, your bank's ATM could just be around the corner, but you're in a hurry, so you don't care to check. Instead, you're willing to get hit with the ATM cash withdrawal fee, plus any ATM surcharge.
However, with easy access to the Internet through smartphones, it would be wise to search for nearby ATMs. Many mobile banking applications feature a locator tool that will help you find an ATM based on your GPS location.
Remember to use affiliated ATM networks. There are financial institutions -- usually community banks and credit unions -- that partner with other financial companies to expand ATM availability without imposing surcharges. For instance, some smaller banks and online banks work with the Allpoint or STAR ATM networks to provide more surcharge-free access to ATMs. Some credit unions also partner with the CO-OP ATM network, which doesn't impose surcharges for members of partnered credit unions.
Additionally, financial institutions may work with retailers to place branded ATMs within their stores. For instance, Chase (JPM) has ATMs in Duane Reade and CVS/pharmacy (CVS) stores, while Citibank has ATMs in 7-Eleven convenience stores.
For example, you can buy a candy bar for $1 and ask for $20 in cash back. The cashier will charge $21 to your debit card and will give you $20 in cash plus your purchase. There is no fee to use this cash back option. (Keep in mind the store may restrict how much cash back you can pull out, and you are subject to your card's daily debit card purchase limits.)
In the end, this method is likely to cost less than paying an out-of-network ATM fee.
Find a no-ATM-fee checking account. One big move to minimize out-of-network ATM fees may be to look for a new checking account that doesn't charge any ATM fees. Most brick-and-mortar banks are unable to waive ATM fees because the fees go toward the operational costs of their ATM networks.
No-ATM-fee checking accounts are more common at online banks and brokerages. Ally Bank and Schwab Bank, for example, have free checking accounts that offer unlimited ATM fee reimbursements.
If you are thinking about opening a new checking account, remember that you don't necessarily have to ditch your old one. Since there is no monthly fee, you can just designate your no-ATM-fee checking account for out-of-network ATM cash withdrawals.
Switch to a better big bank. When you notice you're paying too much in out-of-network ATM fees, it may not be because you are using a big bank that charges such fees. It may be because you aren't using the right big bank with the most convenient ATM network located near you.
Switching from one big bank to another big bank with more accessible ATMs could help mitigate hefty ATM fees.
Be sure to take notice of bank branches and ATMs near places you visit frequently such as your workplace, grocery stores and restaurants.