What is an ATM Fee? A Guide to Using Debit & Credit Cards at ATMs

Automated teller machines (ATMs) allow customers to withdraw cash and perform other banking services without interacting with a teller or branch representative. Users may pay a fee to access services through ATMs.

ATM owners may charge a fee when customers use their machines. Banks may charge a fee when their account holders use an out-of-network ATM. Users may also pay for currency conversion or exchange when accessing international ATMs.

Every ATM has an owner/operator, and most operate through extensive networks. ATM cards that work in one networked machine typically work in all the others.

Issuing banks seek to attract and retain customers by providing free access to their ATMs. Non-bank owners are typically brick-and-mortar businesses or individual investors maintaining ATMs as a passive income source.

Fees are often a factor because users may prefer accessing nearby out-of-network ATMs rather than in-network machines further away.

Operator Fees

ATM owners charge operator fees, also known as surcharge fees, to out-of-network users.

Issuing banks and other financial institutions own most ATMs. Banks deploy ATMs in lobbies, on the outside walls of branch buildings, near branches in kiosks, and in drive-up locations for auto access. Banks may also place ATMs in malls, shopping centers, and other public locations such as mass transit terminals.

Independent owners and individual investors operate many, but not all, ATMs in stores, gas stations, restaurants, and other locations away from the physical proximity of bank branches.

Extensive networks link many ATMs to enable surcharge-free transactions. For example, users with Visa credit, debit, and ATM cards can access Plus Alliance ATMs surcharge-free, and users with Mastercard credit, debit, and ATM cards can access Cirrus ATMs surcharge-free.

The Allpoint and MoneyPass networks connect cards from participating financial institutions to ATMs in banks and other locations, including pharmacies and gas stations.

Hundreds of interbank ATM networks operate worldwide. Independent ATM owners can gain more users (and more store traffic if the ATM is near a point of sale) by participating in one or more interbank networks. Networks often pay ATM owners a portion of the interchange fees they earn.

But not all ATM owners participate in all networks. Many banks and independent owners leverage surcharges as a revenue source.

A private ATM owner may have little incentive to join one or more card networks if ATMs are rare in their area, as they must rent space for their ATM, or their ATM generates in-store traffic or sales. Users should understand where to use their ATM cards without incurring operator fees.

Out-of-Network Fees

Many issuing banks operate extensive ATM networks and may charge out-of-network fees when cardholders access non-bank ATMs.

Some issuing banks waive out-of-network fees by participating in interbank networks. Others offer unlimited out-of-network fee reimbursement or reimbursement up to a specific dollar amount or percentage. Some may reimburse out-of-network fees as a perk for specific groups, such as veterans or senior citizens.

International Transaction Fees

Most U.S. issuing banks charge international transaction fees to cover various costs. Fees vary according to the bank and the transaction scenario.

International transaction fees pay for out-of-network ATM use, currency conversion and exchange rate markups, operational expenses, and other costs.

Banks may charge a percentage of the transaction amount, a specific dollar amount, or a combination.

ATM fees are part of the financial transaction marketplace. Business and marketing decisions determine when and where ATM owners and issuing banks charge fees and how much.

The decline in cash use and the widespread distribution of interbank networks may influence some ATM owners and issuing banks to charge more to those who do pay.

Location

Geographical location can impact ATM fee amounts in several ways.

Issuing banks may have interbank network agreements to reward or incentivize consumers in certain areas. For example, banks that are prevalent in particular regions may reimburse operator fees and defer out-of-network fees where their customers are more likely to use non-bank ATMs.

Conversely, banks may charge higher out-of-network fees for using ATMs in areas with a higher cost of living or where interbank network agreements don’t pertain.

Independently owned ATMs in rural areas may have a corner on the cash withdrawal market, incentivizing owners to charge higher than the market would bear in an urban region with a high ATM concentration.

The same is true for cash-only businesses with ATMs at the point of sale. It’s in the ATM owner’s interest to charge a high operator fee if customers must use the ATM to transact in that store location.

Bank Policies

Banks and card issuers deploy ATM fees as part of their holistic marketing and revenue strategies.

Some wish to market themselves as going easy on fees. For example, they may advertise lower overdraft and maintenance fees than their competitors. They may compensate for revenue loss from lower overdraft fees by charging more for out-of-network ATM use. Or they may adopt a low-fee structure overall and seek additional revenue by other means.

ATM Charges at Selected Financial Institutions

Banks also use fees to drive loyalty. For example, they typically charge fees to customers using a competitor’s card. But they may waive or reimburse competitors’ fees to keep customers from moving to a new bank.

Account Type

Banks and card issuers seek to incentivize customers to use accounts that bring the institution the highest return or generate the most business flexibility. ATM fees can be a component of customer acquisition, retention, and revenue strategies.

For example, institutions commonly waive out-of-network fees for customers using online checking accounts or checking accounts with high deposit thresholds.

Fee waivers and reimbursements may also encourage customers to adopt rewards checking accounts, rewards credit cards, and high-yield savings accounts. Banks commonly target students, veterans, and other demographic groups for fee waivers and reimbursements.

Different tiers within a product lineup may have various reimbursements. For example, a checking account with a certain minimum deposit may reimburse fees up to a certain amount, while an account with a higher minimum may offer unlimited fee reimbursement.

Banks and online review sites are good sources of information regarding fee reimbursements and other perks.

ATMs provide access to cash and other banking services, such as balance queries and deposits. The fact that those services often require fees may seem surprising. Customers who know about the different ways ATM fees can impact their finances are better able to circumvent them.

Depending on the circumstances, using a credit card at an ATM can be convenient or financially counterproductive. Using a credit card at an ATM engages the customer’s credit line. 

Any credit card use can increase your credit utilization ratio and negatively impact your credit history and score. Credit card issuers also typically have specific fees and terms for cash withdrawals.

You’ll Need to Request a PIN

The biggest hindrance to using a credit card at an ATM is there may be no PIN associated with the card. Cardholders use credit card PINs so rarely that they may not remember them.

ATM networks require PINs to secure transactions and reduce the risk of unauthorized account access, protecting cardholders and financial institutions. Requiring PINs also helps ATM networks maintain operational consistency for authentication standards.

Contact your card issuer to verify your identity and request or change a PIN. New PINs may be available immediately or arrive in later correspondence. Users must activate new PINs according to the issuer’s instructions (which may involve a phone call).

Issuers Impose Limits on Withdrawals

Banks usually establish daily ATM withdrawal limits to protect customer deposits from fraud or unauthorized use. Likewise, issuers do not expect customers to use credit cards at ATMs without limits.

Issuers set cash advance limits based on creditworthiness and account history. Limits are generally significantly lower than credit limits. Customers intending to use credit cards at ATMs must understand their limitations.

You’ll Pay Higher Fees

Credit card issuers consider cash advances at ATMs riskier than conventional card transactions because they may be more challenging to repay. Higher fees and interest rates on cash advance transactions help compensate for the added risk.

Administrative and processing costs, including network fees, transaction processing fees, and operational expenses, are higher for issuers. These costs typically make cash advance fees for credit card transactions at ATMs higher than standard ATM transaction fees.

Immediate Interest Charges

Unlike standard card transactions, there’s no grace period to pay off the cash advance before interest begins accruing.

Interest charges begin immediately and add to the financial burden associated with using credit cards at ATMs.

It pays to use credit cards for their intended purpose at the point of sale and access cash withdrawals through other means.

Knowledge is power when it comes to ATM use. ATM owners and card issuers invest in ATMs to provide a valuable public service. But the changing dynamics of the financial services industry result in frequent changes in the fees associated with ATM use.

ATMs can simultaneously be a profit center, marketing tool, and customer acquisition and retention driver.

Even in an era of declining cash use, the onus is on the consumer to understand how ATM fees can impact their financial flexibility. Understanding your bank’s fee policies and perks and how they stack against the competition is imperative for frequent cash users looking to minimize ATM fees.