How to Avoid Bank ATM Fees

Banks That Reimburse ATM Fees

Now, there are more banks that rebate ATM (Automated Teller Machine) fees. Whenever you withdraw money from your accounts using the ATM machine, there is an ATM fee levied. This is applicable whether you are using the ATM machine from another bank or ATM owner (ATMs that are owned and operated by separate businesses entities).

From the banks’ perspective, ATM services do not generate any revenue and is actually a cost. However, it is necessary to provide ATM banking for customers or they will simply go to another bank. The banks with more ATM machines tend to have a competitive advantage as consumers like to have easy access to their accounts and money withdrawal. Different banks usually have some agreement among themselves to allow customers to use the various ATMs within the same bank network for transactions. Doing so allows them to leverage and reduce their ATM operation costs. While you can usually use the ATM belong to your bank for free, you may need to pay a fee with regard to using other bank’s ATM machines.

Since ATM machines are expensive to build and maintain, the smaller banks found that they can provide the same convenience to users by reimbursing the ATM fees charged to their customers when using ATMs belonging to other banks. This allows them to have the same competitive advantage as larger banks yet at a lower cost. This is especially true with the new online banks with no physical branches or ATM machines. You are usually allowed a certain number of free ATM transactions per month.

List of Banks that Rebate ATM Fees

Here is a list of banks which reimburse your ATM fees:

Bank of the Internet – $6 rebates per month for ATM transactions at other banks

ING Direct Electronic Orange account – free ATM withdrawals from ATM machines on the Allpoint Network

Founder’s Bank and Trust of Grand Rapids – can open new accounts online. ATM card can be used worldwide and 4 free ATM transactions per month for using another bank’s ATM.

First Internet Bank – up to $6 fee rebates per month for interest bearing checking accounts, money market savings accounts and regular savings accounts.

E*Trade – well known online stock trading brokerage with online banking services. The E*Trade Max-Rate checking account offers unlimited ATM surcharge rebates except a 1% fee for ATM transactions in non USD currencies.

Charles Schwab Bank – internet bank with checking account that gives unlimited ATM surcharge rebates. Restrictions apply.

NetBank – rebate ATM fees up to $3.50 per statement cycle. This is an only online bank with no branch offices. All banking transactions are conducted online or through ATMs.

Ways to Avoid ATM Fees

There are many more online banks that give ATM surcharge rebates, although the amount of free ATM transactions varies. For example, USAA Federal Savings Bank will rebate the lesser of fees on 10 withdraws per month or $15 per month. There may be certain terms and conditions to enjoy free ATM banking, such as having a minimum balance. There may be other fees such as statement fees, per check fees, etc. which can cost you more compared to the ATM fee rebates given.

Note that these are rebates, hence the fees will still be deducted from your account at the time of transaction. They are only returned to your account at the end of the month together with your statement. I use the following method to track ATM surcharge fees – when I do an ATM withdrawal, simply subtract the amount withdrawn and the fee from the balance in my checkbook. At the end of the month, the total rebates will show up on the bank statement as a deposit.

If your current bank do not offer any free ATM withdrawals, here are some alternatives.

Banks With No ATM Fees

Maintain a bank account with unlimited ATM rebate specifically for ATM usage. There are some banks with no fee account option. Even though they may not provide other essential banking features, you can use this account just for the free ATM transactions. Deposit the amount of money you need for each month into this free ATM account, while keeping the rest of your money in your regular bank checking account. you can do this via a check or through online electronic deposit.

The ATM fee is a flat fee per transaction regardless of the withdrawal amount – you pay the same fee for withdrawing $20 or $100. Plan your money needs and make a few large withdrawals per month. Most banks will only rebate up to 5 ATM withdrawals per month. For example, if you tend to withdraw $20 every day from the ATM machine, switch to making a $100 withdrawal each week.

Debit Card Cash Back

Many banks provide a debit/credit card that can be used for ATM transactions beside purchases. When you use the card to make a purchase, you can choose to receive additional cash back in multiples of $20. This is actually equivalent to a free ATM cash withdrawal. Thus, you can get free cash withdrawal with no ATM fees whenever you pay with your debit card.

Use your debit or credit card for purchases instead of paying cash. Many vendors now accept cards and you can also earn some cash rebate or reward points by using your debit or credit cards for purchases. This avoids the need to withdraw and carry cash. For example, the USAA rebates 0.5% of the total amount charged to my credit card, so I usually use the card and hardly need to pay cash.

There you go, several ways to reduce your ATM fees and take advantage of new offers to find the best banking deals for your needs.

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