If I told you that I had a way to get up to a guaranteed 25% loss on your money what would you do? If you didn’t punch me in the face your next reaction would probably be laughter. Why in the world would anyone willingly take a 25% loss on their money? Well, most people wouldn’t, but that doesn’t mean it isn’t happening to smart folks like you and me every single day.
In fact, I’m even ashamed to admit that I’ve done it plenty of times without even really thinking about it. It can happen to the best of us and when we are in a hurry or don’t plan ahead you may also be carelessly throwing money out the window without even thinking twice about it. So, how are so many people throwing their hard-earned money away?
Call it a Convenience Fee
As you probably know, not all ATM transactions carry a fee. If you use your own bank’s ATMs, or stay within a particular network, or use a credit union, you may be able to avoid fees completely. But what happens when you aren’t near one of your bank’s ATMs, no credit unions nearby, and you need cash right now? Chances are you’re going to just hit up the nearest ATM. Hey, that’s why ATMs are so great. They are convenient. But this convenience comes at a cost.
Typically, you’ll be assessed a fee by the bank that owns the ATM. It’s not uncommon to see these fees run in the $2-$3 range. In addition, there’s a good chance your own bank is going to charge you a fee for using another bank’s ATM. Again, it could be between $2-$3. But surely, that’s not a big deal, right? Wrong. What if you just stop to grab $20 and you’re charged $2.50 by the ATM and $2.50 by your bank — that’s $5 in fees just to get $20 of your own money. That’s 25% of your transaction!
Ok, so maybe you withdraw $40. That’s still a 12.5% fee. $50 withdrawal? 10% fee. Even at $100 it will cost you 5%. Now, let me ask you this. If you were guaranteed to lose 25, 10, or even 5 percent in any other investment, be it in the stock market or otherwise, there’s no way you’d even consider putting your money there. But an ATM fee? Suddenly people couldn’t care less. It’s amazing what people will do for convenience.
Stop Throwing Your Money Away
Instead of paying a fee just to access your own money you should take some steps to eliminate this behavior at all costs. Here are a few things you can do to help minimize ATM fees in the future.
Consider a credit union. If you’re a member of a credit union and part of the co-op network you have over 28,000 in-network ATMs at your disposal. With such a large number of qualifying ATMs to choose from you have a better chance in finding an ATM near you that won’t cost you a thing. The only drawback is that you still need to have a selection of credit union ATMs around you. In most cities this isn’t a problem, but around here the nearest co-op ATM is over 10 miles away.
Always carry some cash on you. I know a lot of people these days operate virtually cashless, but this is exactly what can lead you to paying unecessary fees in a pinch. Sure, most places will take debit or credit cards, or possibly even checks, but what happens when you’re in an unexpected situation where cash is the only option? No time to run to the bank or maybe the banks are closed, so you hit the ATM. There goes your money. So, make it a habit to keep some cash on you at all times. It doesn’t have to be a lot, but if it’s there in a time of need and keeps you from having to go to the ATM you’ll be thankful you had it.
Plan your cash needs in advance. If you can, try to plan out in advance what your cash needs are for the week and make one large withdrawal at the bank or your bank’s ATM. If you think you’re going to need $100 over the course of the week don’t take out $40 on Monday and assume you’ll just get the rest later when you need it. You’ll probably end up being pressed for time and have no other choice than to get hit with an unnecessary fee.
Use debit card purchases to get cash back. Probably one of the easiest tricks is to get cash back when you make a debit card purchase. You don’t have to be at a bank or even use an ATM for this to work. Simply make a purchase with your debit card and ask for cash back. It doesn’t cost you a thing. The only drawback is that most places will have a limit on how much cash you can get back per transaction. So, don’t go in and buy a candy bar and ask for $200 cash back. It probably won’t work.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
My name is Laurie McLachlan and I work for PerkStreet.
I wanted to let you know that we do not limit the amount of cash back you can earn - there is no cap.
Also, while it's true that you don't see your cash back earnings until after you've spent $100, it's not because you aren't earning cash back, it's just because we always show your cash back in whole dollars.
Glad you like the network of free ATMs. We think having ATMs all over the place is better than having a bunch of expensive branches that you may never need to visit otherwise.
I'm glad you're a customer and I appreciated the chance to hear your thoughts about PerkStreet.
It may be far fetched but...
I have 2 bank accounts. One is a Credit Union which is Kinecta, which as many of you know a credit union has a great co-op system. Bank account number 2 is an online only bank called Perkstreet.
I signed up to that Perkstreet for the $100 opening bonus and the 1% cashback on purchases (which is not calculated until you have made 100 bucks in purchases and there is a limit to the cashback, but I digress.)As it so happens, Perkstreet is apart of the STARsf atm network; surcharge free. And those ATMs are EVERYWHERE!; malls, 7-elevens...you name it!.
So after I am done paying myself and bills. I split my play money into 2 withdraw-able stacks (so $400 ---> 2 x $200) and put them in these checking accounts and voila! I think I am in the biggest ATM network combined.
Some people tell me this is too much effort but I like to work hard for my money.
Keep in mind that $20 withdrawal + $5 in fees = $25 coming out of your account; 25/5, NOT 20/5.
It's a five percent difference, but it is a glaring math error in your headline.
I hate those fees. I know it, should run over to cvs get a pack of gum and some cash but noooo. I end up forking over 5 bucks when all is said and done.
This is great advice. I do quickly do the math to figure out what % the feel will represent.
I think I will find a bank or credit union the reimburses me for ATM withdrawls.
And don't forget...paying off a high interest credit cards is the equivalent of earning that money in some sort of investment...so if you paid off a 25% credit card that would be like earning 25%.
With most credit unions in the co-op network, you can use ATMs inside 7/11 convienience stores as well, some are even deposit accepting ATMS! You can even text MYCOOP with your location, and it will give you a list of ATMs that you can use in your area.
My credit union (Addison Avenue FCU) will reimburse all non-Coop ATM transactions as long as I use my debit card at least 12 times a month, get direct deposit, and get E-statements. The best part is, if I meet all of those requirements, along with the ATM fee rebate, I also get 3.51 APY on my money!
Anyhow, eff paying a financial institution for taking out MY money. I don't think anyone this day and age should have to pay ATM fees.
I am a big proponent of credit unions. I have been using the same credit you for almost 10 years now. My credit union reimburses ATM fees which I make use of once in a while. I do almost all of my purchasing on a debit car because it makes it extremely easy to track from a budgeting prospective. My biggest problem with cash is that I don't remember exactly how much I spent on what and when. That and I'm too lazy to enter it in later. By using the debit card it's done for me. I do make sure to carry either $20 or $40 in cash on me at all times just in case.
I pay ATM fees all the time. No big deal to me.
But that's only because I picked a credit union that reimburses me for the fees, and I make sure I never go over that amount.
Before I joined this credit union, I always went into Publix to buy a pack of gum to get cash. In South Florida, you're never more than 5 minutes away from one anyways.
It's so true that many people nowadays do not carry cash on them simply because most places do accept credit or debit. However, once I ran into a situation where I needed cash and didn't even think I had money on me until I realized I had an emergency $20 in the back of my wallet which was totally a lifesaver. It's a good idea to maybe keep a little cash in your car compartment or maybe at the back of your wallet for emergency situations only.
I have tried and tried to explain this to my son, but he refuses to change his behavior. It drives me up a wall! It's especially bad when he uses the ATM multiple times over a weekend, eventually spending $100-200, but taking it out $20-40 at a time.
One of the best things about the DC metro area is that there's a CVS on every corner (feels like it anyway). If I've forgotten to get cash, I pop in and buy some toiletry I'd need anyway but wasn't out of yet, then get cash back. Chapstick is one of my faves.