Using a bank not part of your bank’s network has always come at a price, but that price is higher than ever, according to a recent study.
The average out-of-network ATM fee has risen to $4.52 per transaction—a jump of 4% over the last year, and 21% over the past five years. That’s including the fee usually charged by your financial institution, which is separate from the fee charged by the ATM owner.
Taking cash out of an ATM using your credit card is an even worse idea. Cash advance fees for credit cards can be upwards of $10, and the interest rate is usually much higher than the interest rate for purchases.
The safest bet, if you need to get cash from a machine, is to use an ATM linked to your bank, and use a debit card linked to your bank account. This is typically fee-free. Other options include using a prepaid reloadable debit card to take cash out of an ATM, or getting cash back at a store when making a purchase.
Surprising regional differences in ATM fees
Looking at different cities, Atlanta had the highest ATM fees, at an average of $5.15 per transaction. Surprisingly, San Francisco, known for astronomical housing prices, had the lowest ATM fees, at an average of $3.85 per transaction.
Overdraft fees – the fee charged when a consumer makes purchases in excess of the credit line or balance of their credit card or bank account—also vary by region. In Milwaukee, the average overdraft fee is $34.79, while San Francisco again comes in low at $30.35.
Finding a fee-free account is possible
If you don’t want to pay fees for banking, the survey showed that accounts that don’t earn interest are the best bet. Thirty-seven percent of non-interest-bearing checking accounts are fee-free. That’s the lowest percentage since the annual survey began in 1998. In 2009, a whopping 76% of checking accounts were free, illustrating how many more fees have been added to the typical bank account in the past several years.
Many checking accounts waive fees if customers do things like receive direct deposits, pay bills through the online account center, or maintain a minimum balance. But more and more, it is difficult to find a truly free checking account.
Many people are turning to reloadable prepaid debit cards as an alternative to traditional checking accounts. These often have fees as well, but they may be lower than checking account charges. Reloadable prepaid cards can be used to pay bills, get cash from ATMs, and receive direct deposits, just like checking accounts.