It’s becoming more expensive to take money out of an out-of-network ATM. According to information collected by Bankrate.com, it now costs users an average of $4.72 to withdraw money from an automatic teller machine (ATM) that is not owned by their bank. This amount is the highest amount since Bankrate.com started tracking the data in 1998. At that time the average fee was $1.97.
The ATM fees stand out particularly in an era where banks are offering historically low interest rates to depositors. Bankrate.com reported that the average yield on a checking account is only 0.6%. This is down from 1.35% in 1998. However, the number is up slightly from the low amount of 0.4% in 2014.
We are becoming a largely cashless society. In fact, the Pew Research Center reports that 3 in 10 Americans report making no purchases with cash in a typical week. And the percentage of people who use cash for all their purchases fell from 24% to 18%.
That being said, cash is still the most frequent method of payment in the country at approximately 31%. Many Americans have access to their local bank, and in many cases they can find several branches of their bank within blocks of each other. However, ATM fees can be a burden on many low-income Americans who may live in neighborhoods that banks tend to avoid. This can make an out-of-network ATM their only option for getting cash.
There are two fees a customer pays when using an “out of network” ATM. The first fee is a surcharge from the owner of the machine. There is also a separate charge that a customer’s bank will charge for using a machine that is not in their network. According to the Bankrate data, the surcharges now average $3.09. The average “non-bank ATM fee” is $1.63.
ATM fees represent a reliable, if uneven, income stream for banks. Greg McBride, chief financial analyst at Bankrate.com quipped, “Nobody’s worried about alienating a non-customer.”
With that said, it’s important to note that approximately one-third of banks do not charge “foreign ATM” fees. This is one incentive that banks have issued as a way to add new customers. This is particularly true of community banks that may not have a large branch network.
Of the 25 metropolitan areas that were part of the study, Houston had the highest average fee ($5.58). The lowest average fee was found in Los Angeles ($4.15).