We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. Learn more.

Published: Oct 11, 2021 8 min read
Dollar Scholar banner with ATM machines.
Money; Getty Images

This is an excerpt from Dollar Scholar, the Money newsletter where senior writer Julia Glum teaches you the modern money lessons you NEED to know. Don't miss the next issue! Sign up at money.com/subscribe and join our community of 160,000+ Scholars.

When I was in college, I frequented a pizza joint called Satchel’s. In addition to producing a seriously good pepperoni pie, Satchel’s had a reputation among University of Florida students for three things:

  1. Its eclectic decor — if you got lucky, you could eat near the vintage toy section, under the airplane or in the 1965 Ford Falcon van parked permanently outside the restaurant.
  2. The fact that it burned down. Multiple times.
  3. It only accepted cash.

That third point was the hardest to contend with because I was never responsible enough to think ahead of time to bring cash. When the bill came, I’d always have to excuse myself from the table, slink to the back of the restaurant and stand in line for the ATM.

Satchel’s payment policy changed after I graduated (of course it takes credit cards now), but my struggle hasn’t. No matter how old I get, I just cannot seem to prepare in advance for the possibility of needing cash. I’m no longer dodging waiters carrying piping-hot pizzas in a crowded hallway at Satchel’s, but I’m still ducking into bodegas to take out cash on the reg — before I grab drinks at cash-only bars, before I have to drive through tolls, before I need to tip at drag shows. And as a result, I pay ATM fees constantly.

I know it’s my own fault, but it seems colossally unfair that I should have to pay money to access my own money.

Is it bad to pay ATM fees all the time?

I got on the phone with Bruce Wayne Renard, the executive director of the National ATM Council, to get some context. He sympathized with me, explaining that he’s read several news reports in recent years about “quote-unquote skyrocketing ATM fees.” But, he says, “the reality is, there are two types of ATM fees out there.”

The first is the ATM surcharge, which typically comes from the small business owner who owns and operates the ATM. By law, the owner has to disclose this surcharge — and give me a chance to cancel my transaction for free before it’s levied. It’s typically like $2 or $3.

“The ATM operator has the cost, which is significant, of keeping this box of money out there in the public,” Renard says. “It’s a very highly sophisticated computer that’s connected to a telecommunications line, and it requires a lot of maintenance and constant loading of cash.”

ATM surcharges don’t usually increase much because of the way the marketplace works. If the convenience store on the corner has a $2 ATM surcharge, but the one across the street has a $5 one, customers are generally going to pick the cheaper option. Stores can’t significantly raise the cost using their ATM because people will simply go elsewhere.

The other fee is perhaps more objectionable.

“The fees that have skyrocketed,” Renard says, “are the banks’ own fees for using ATMs that are not theirs.”

This is called a foreign ATM fee, but it has nothing to do with traveling to another country, says Sarah Grotta, director of debit and alternative products at Mercator Advisory Group. The foreign ATM fee comes into play when, for example, I use a Wells Fargo ATM to take cash out of my Bank of America checking account.

In that scenario, Wells Fargo is basically saying, “Hey, I'm letting your customer use my ATM, and I’ve gotta do all this activity to make sure that they've got funds in their account, and there’s all this connectivity that goes between different operators behind the scenes,” according to Grotta. Bank of America, in turn, passes that cost along to me.

Foreign, or out-of-network, ATM fees typically sit around $2. The fees often stack. So if I were to use an ATM that was out of network, I could potentially have to pay both the surcharge to the owner and a foreign fee to my bank, forking over several bucks just to get my hands on cash that belongs to me.

Meanwhile, the banks are raking it in. In 2017, JPMorgan Chase, Bank of America and Wells Fargo reportedly collected about $6.4 billion in ATM and overdraft fees.

How to avoid ATM fees

Is this frustrating? Yes. Avoidable? Also yes, according to Vadim Verdyan, head of advice at Albert.

It’s not necessarily bad to pay ATM fees as often as I do, but it’s a waste of money. If it costs me $6 every time I get cash, and I do it once a month, that’s over $70 a year.

“Those little charges can add up really quickly,” Verdyan adds. “These funds could be invested or saved.”

As such, Verdyan says I should do my best to avoid ATM fees. One way to do this is to plan ahead — perhaps by always keeping $50 or so in my wallet that’s earmarked for cash-only situations. (This also helps mitigate security risks — when I'm not desperate for cash, I might be less likely to use a sketchy ATM with a skimmer hidden on it.)

Another is to go a little bit out of my way to find an in-network ATM or surcharge-free ATM. I should specifically check to see if my financial institution has partnered with Allpoint, which has 55,000 surcharge-free machines in Target, CVS and Walgreens stores, or CO-OP, which has 30,000 in 7-Eleven, Costco and Dunkin locations. Some banks, like PNC, also reimburse ATM fees for certain customers.

Finally, Grotta says I may want to take advantage of chances to get cash back at a store. If I use my debit card to purchase a candy bar or something else small, I can usually avoid fees and request to get cash back. If I’m smart, I could even save money while satisfying my sweet tooth.

The bottom line

ATM fees come from two different places and are totally avoidable if I just plan ahead. If I want to direct my fee fury somewhere, I should target banks — not so much the small business owners who have independent ATMs.

“It’s good to have cash conveniently available when you need it,” Renard says. “It’s unfortunate that we’re having these extra added charges.”


More from Money:

Is It Legal for Stores to Charge Extra if You Pay With a Credit Card?

Venmo Is About to Get More Expensive for Millions to Use

Best High-Yield Savings Accounts