All ATMs are not the same, particularly if you need cash and can't get to your bank or credit union where a cash withdrawal is typically free. But by knowing where you're likely to find the highest-priced ATMs, you can reduce your costs or avoid them altogether.
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There are more than 400,000 ATMs in the United States, according to the American Bankers Association. The median cost of ATM fees in the U.S. is $2.33,according to Bankrate.com's 2010 Checking Study, but that number can vary greatly. Remember, too, that you're likely to pay two fees when you use ATMs out of your network -- one fee to use the machine, and another fee to your own bank. The latter fee, called an "off-us" fee, add's another $1.41, meaning the median total fee for accessing your own cash on an ATM outside your own network is $3.74.
For money-savvy consumers, knowledge is power. Here's where you're likely to find the most expensive sources of cash and how you can avoid -- or at least minimize -- the costs.
Entertainment venues: Amusement parks and casinos have among the highest ATM fees. In fact, The Walt Disney Co.'s theme parks proved to be among the most expensive places in the U.S. to withdraw cash from, according to Mike Moebs, who spent $20 at an ATM there. Moebs is founder of economic research company Moebs Services. Part of the reason is because consumers are having a good time so they're often willing to spend more money to keep the good times rolling, Moebs says. The other reason: You have few other choices if you run out of cash.
Remote places: Planning a vacation to a small island? Expect to pay more to access cash because the island's remote nature "makes it more expensive to service that ATM," says Nessa Feddis, vice president and senior counsel for the American Bankers Association. Any place that would require an armored truck to travel a far distance to refill the machine or a plane to fly in the cash will yield a higher cost to the ATM's customers. Ironically, if you happen to be going to the most far-flung ATM -- at McMurdo Station, Antarctica -- you'll catch a break. The Wells Fargo ATM there charges no fees.
Travel hotspots: A lack of options when traveling means ATM operators need not worry about competition. "Airports have some of the highest ATM fees because the ATM owner knows you're trapped and willing to pay," says Edmund Mierzwinski, director of the consumer program for U.S. PIRG, the federation of state Public Interest Groups. The ATMs in hotels are also typically more expensive, says Moebs, but some hotels will let frequent guests get cash for free at the front desk, he adds. And if you're on a floating hotel you can't leave -- also known as a cruise ship -- expect a high fee. On cruise ships in the Royal Caribbean fleet, for example, expect to pay $5.50 for the privilege of using the ATM, plus your own bank's "off-us" charge.
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Non bank ATMs: Banks and credit unions aren't the only players in the ATM game. In fact, the two biggest ATM operators -- Cardtronics and Payment Alliance International -- are not banks. Getting cash from a non bank operator will often be a more expensive option because such companies are in it for a profit, whereas banks consider ATMs to be one of many value-added services. Another reason for the higher costs is because many non bank operators still have to go through a bank to secure cash, says Moebs, so profits must be split between the bank, the ATM operator and the venue in which the ATM is housed.
Convenience stores: Since they're typically home to non-bank ATMs, convenience stores often have higher ATM fees than a bank or credit union down the street. Another reason for the high costs: Convenience stores are looking to make a profit on the ATM, says Feddis, so they typically charge the operators for renting that space, which is then passed onto the ATM user.
Understanding the charges
While consumers typically grumble about ATM fees,buying and maintaining an ATM is not free. Full-service ATM scan cost more than $50,000, Feddis says. Then ATM operators must pay to have them installed, connected to phone systems and protected from fraud and theft. There are also labor costs associated with refilling the ATM with cash.
Banks typically charge non customers who use their ATMs to ensure that the costs of maintaining the ATMs don't fall disproportionately on the shoulders of that bank's customers, Feddis adds. The median cost of that surcharge is $2, according to a 2011 survey of more than2,500 banks and credit unions by Moebs Services.
While the surcharge covers the costs of maintaining the ATM, your bank charges you a fee for the ability to have money routed to you from your bank through an intricate network.
The network creates this elaborate system that's almost like a railroad track system where at any point, you get connected and sent to the right place," says Feddis. Since your bank is charged for being able to send money via this network, your bank may charge you to cover its costs, Feddis adds. About 75% of banks charge this "off-us" fee, which critics say is far in excess of the actual cost.
Avoiding the costs
But not all banks pass such charges on to consumers. Some banks waive the network fee for customers who maintain a certain account balance, while some credit unions and smaller, community banks may eat the cost for all customers. Some banks and credit unions have even banded together to form special networks of their own, "so if you're a member of one of those banks and you use an ATM in that network, they won't charge you," Moebs says.
As a rule, bigger banks tend to charge more in fees than credit unions and community banks. According to a Moebs Services survey, the median total cost for accessing the ATM of a huge bank (one with $50 billion or greater) is $4.25while the median total cost for accessing the ATM of a credit union is $2.50.If you don't have access to your own bank, "your best deal is to go to a community bank or a credit union," Moebs says.
Another way to avoid fees: Skip the ATM completely and use your debit card to get cash back from a retailer, such as a grocery store, suggests Moebs.
The final way to keep your money in your pocket -- plan ahead. "Avoid high ATM fees by being smart about carrying a little money with you," adds Mierzwinski.
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