By Amy Bradney-George
25 February 2009
Changes to ATM access fees next month will mean hassles when withdrawing money from ATMs. With additional charges from both banks and ATM owners, this double-whammy on cash withdrawals made from foreign ATMs could lead people towards other options, like credit cards
Elissa Freeman, senior policy officer for the consumer information group CHOICE said the ATM reform could lead to changes in consumer behaviour if it becomes more expensive to withdraw cash.
Image by angusf
“It may affect how often people use ATMs, there may also be people who start using EFTPOS facilities more and it may mean an increase in credit card transactions,” she said.
According to data from the Reserve Bank of Australia, Australian customers made over 400 million cash withdrawals from ‘foreign’ ATMs in the 2007/08 financial year.
Consumer advocate CHOICE calculated a potential $200 million in extra fees after March 3 if people continue to withdraw cash from ATMs not owned by their banks.
Ms Freeman said people should try to understand how their bank account works, and how it will be affected by the new ATM fees and look at what other banks are offering.
“If you can manage a credit card and know how it operates then it’s one option, but there are others you should consider as well,” she said.
“At the most basic, simple level the more you can budget the better…If you can minimise the number of cash advances you make, then that’s a start.”
She said people considering using a credit card more frequently as a substitute for cash needed to ensure they were not going to end up in debt.
“For people looking to use credit cards make sure you check the terms and conditions on your card.”
“You need to know your particular interest rates, fees and charges. The more you know the more independence you have,” she said.
Ms Freeman also said people need to look at where there are ATMs that they can use without being charged extra.
The main concern is the potential for added ATM fees under the new laws.
“The benefits of direct charging reforms will be quickly undermined if customers are charged a separate second fee from their own bank.”
The Australian Bankers Association said the ATM reform will increase competition and customers will be notified of additional charges before they are incurred.
ABA Chief Executive David Bell said it was up to individual banks what changes were made.
“This is an individual bank decision in terms of pricing structures for their transaction accounts, for example, how they recover their full costs. The ABA believes it is legitimate that banks may elect to charge customers a fee and respond competitively.”
He said competition was an important part of the process and fees would be structured accordingly.
“Competition should be allowed to play its part in how all ATM participants in the marketplace price their services – whether it is banks, building societies, credit unions, other card issuers or independent ATM owners. There should be a level playing field.”
Ms Freeman said consumers need to understand how the system works so that they have more independence.
“If you know what terms and conditions are in place, what the charges are, and how to manage them, then you can make the most appropriate decisions for your circumstances.”
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