Australians are still paying unnecessary ATM fees but there are ways to avoid the sting. RateCity investigates.
July 23, 2010
In today's fast-paced world, one of the most convenient ways to access your money from your everyday transaction accounts is through an automatic teller machine (ATM). However is this convenience worth the fees?
According to data compiled by the Reserve Bank of Australia (RBA), there were 25.56 million withdrawal transactions from ATMs by networks outside customers' own financial institutions in May. RateCity calculated that at $2 a transaction (the average cost financial institutions charge foreign customers for using their ATM) this equates to more than $51 million that Australians wasted on ATM fees in May alone.
"Consumers are essentially giving their hard-earned money away to banks when they withdraw cash from an ATM that isn't from their own institution," RateCity CEO Damian Smith said.
RateCity calculated that over the 12 months to May 2010, Australians have paid banks close to a total of $655 million in ATM fees for withdrawing money from ATMs that were not part of their own financial institution's networks.
Information equals choice
Most ATMs now notify you of any charges incurred for using a non-institution ATM, giving you the choice to either continue or cancel the transaction.
According to the RBA, since the introduction of this on-screen information consumers are now more aware of the fees and are more inclined to find an ATM from their own network to avoid the fees.
RateCity calculated there were 2.36 percent or 988,000 more withdrawals made from ATMs that were within customers' own networks, from 41.83 million in April to 42.82 million in May.
"It's great to see that Australians are starting to change their financial habits," Smith said. "This is a good example of the effect that competition has and how the transparency of fees can lead to change in consumer behaviour."
Avoid the sting
If you use an ATM to withdraw money from your transaction account, here are some tips on how you can avoid paying ATM fees.
- Only use ATMs owned by your bank or affiliate companies. Check with your bank to enquire whether there are other brands of ATMs that you can use where you won't be charged.
- If you have to use an ATM that is not from your bank, make it worth your while and withdraw more cash in the one transaction to save you having to visit another ATM later and avoid paying two lots of fees.
- Visit your institution's local branch to check if you can withdraw money over the counter free as some banks don't charge a fee for this.
- Compare transaction accounts online to find one that charges lower or no fees to withdraw money from ATMs.