ATM fees have ramped up 55% over the past 10 years to an average $4.69 per withdrawal nationwide, according to a survey by Bankrate of the top 10 banks in the 25 largest metro areas. Taking money from out-of-network ATMs often involves two separate charges — from your bank and the ATM you’re using — and it can add up.
Pittsburgh ($5.19), New York City ($5.14), Washington, D.C., and Cleveland (both $5.11) rounded out the top three spots for highest average ATM fee, which are substantially above Dallas’s $4.07 — the cheapest metro area for withdrawing cash on-the-go.
ATM fees aren’t the only fees that have climbed. Overdraft fees, what banks charge when your purchase exceeds the amount of money you have in your bank account, are generally $35, according to the report — though a few more generous options brought the average to $33.38, which is still a new all-time high.
Why are the fees so high?
According to Greg McBride, Bankrate’s chief financial analyst, “punitive fees” like these have seen increases over time most consistently. Largely it’s a cost issue. “Fewer out-of-network ATM transactions mean the cost of maintaining ATM networks is being spread over fewer transactions,” he said.
Overdraft fee increases, however, have a more concrete reason. Alerts, emails, texts, and links between checking and savings accounts, and online access all make it less likely for a person to overdraw, reducing a revenue source for the banks. It’s a supply and demand thing.
“As more ways to avoid the fee have come about, it has also made it easier to keep raising the fee,” said McBride. Overdraft protection, something banks can make money on, has to be opted-in, putting a dent in revenue on that front. These are, however, evolving issues, McBride notes. “The CFPB is watching, so this trend will be interesting to watch.”
ATM fees and overdraft charges aren’t the only way bank fees have risen. According to Bankrate, only half as many non-interest checking accounts are free compared to the amount in 2009. However, 61% of accounts Bankrate surveyed waive monthly fees if the account holder sets up a direct deposit. Furthermore, 99% of non-interest checking accounts are or can be free. For checking accounts that actually yield interest, it’s rare — just 5% are free — unless you have a large minimum balance, often $10,000.
Interestingly, however, fees have gone up no matter what the interest rates and checking fees were doing. “Fees have gone up when free checking was fashionable, and when it was not,” said McBride. “Fees have gone up when interest rates are rising, and when they are falling.”
How to avoid the fees
Online banks will often reimburse ATM fees to a certain amount, mostly because they don’t have any branches and may not have a robust ATM network. Ally, for example, will reimburse the first $10 of ATM fees, which amounts to $1.94 out-of-network withdrawals.
Some brick-and-mortar banks, however, do offer ATM reimbursement so it’s important to read the fine print. And it can be possible to negotiate if you’re a long-time customer and you’re unable to avoid out-of-network ATMs.
A big part of it, however, is planning, McBride says. An ATM map? How much money you have in your checking account? It’s all on your smartphone.