Why Pay ATM Fees?

Jul 25, 2016 by

What words come to mind when you study this image?

ATM fee receipt

Here’s my answer:

  • Wasteful
  • Lazy
  • Crazy
  • Broke
  • Financially uneducated

Maybe I’m too harsh. But then maybe my harshness helped Ms. Money Counselor and I get to where we are today. 🙂

ATM Fees—an “Indicator Choice”

I’ve written before about indicator choices. These are small choices, financially trivial on their own, that nevertheless may reveal an attitude about money that helps explain a failure to succeed financially.

I tell you what—if I’d made the transaction documented above, I sure wouldn’t have left my ATM receipt for some nosey money blogger to find and write about. I’d be mortified if the world knew I’d paid a $2 ATM fee for the privilege of withdrawing $40 of my own money. $2 is 5% of $40! This is exactly like voluntarily paying a 5% tax or premium on everything that forty bucks will be spent on. That is insane!

Yeah I know—calm down man, it’s only $2.

But let’s say this individual routinely pays a 5% premium on all her (the individual happened to be a woman—plenty of men used the same ATMs while I was snooping) cash purchases, and let’s say she spends $7,500 in cash a year. That works out to $375 a year in ATM fees. I don’t know about you, but to me, that’s real money!

More importantly, if a person is so nonchalant about wasting money on ATM fees I have to wonder about the tightness of their financial ship. Maybe he or she doesn’t mind throwing away money on active management mutual fund fees too. Or maybe borrowing money from the local payday lender seems like a fine idea. Or perhaps the individual has continued to pay private mortgage insurance when they don’t have to, just because he or she isn’t paying attention. Any or all of these would make a bunch of $2 ATM fees look like pocket change.

Why Pay an ATM Fee?

I can understand how people might find themselves in a rare circumstance in which they must pay an ATM fee. But, in general, ATM fees are incredibly easy to avoid:

  • Use a debit card, for crissakes.
  • Use only your bank’s ATMs, and if your bank doesn’t offer free ATM transactions, change banks ASAP!
  • Plan ahead and be sure to have enough cash on hand so you’re not caught short

What Am I Missing?

Help me out here, readers. What am I missing? Why would anyone pay an ATM fee? Do you pay ATM fees? If so, why? I feel like I must be overlooking something obvious. Let me know in the comments.

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  • The closest ATM to my house charges $3 and lets you take out as little as $10 – ouch! Can you imagine!?!

    Like most decisions we make, planning ahead can save you money. Wait till the last minute to buy Christmas/birthday/anniversary gifts and you usually overspend. Same with buying a car. Same with ATMs – wait till the last minute to get cash and you pay the price. Plan ahead and you’re fine. It’s a convenience tax, nothing more.

    • It all speaks to the poor state of personal finance education me thinks. A year should be required of all to graduate high school, imo.

  • Our bank is not very close, but with a small purchase most grocery stores will give you cashback without a fee. At least you can get some beans for those 2 bucks.

    • Excellent point, Mr CK–another fee-free option for getting cash in a pinch.

  • A number of banks offer to refund a certain amount of ATM fees every month, maybe they are getting reimbursed by their bank?

    • Thanks kudy, I didn’t know that. Maybe I should not be so quick to judge, eh? 🙂

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