Consumers who use ATMs not owned by their own bank paid almost $670 million in mostly unnecessary fees last year, research shows.
The fees, known as foreign ATM fees, are those charged by the ATM operator when a consumer uses a machine serviced by a bank other than their own institution, or not in a network agreement with their bank. The fees are $2 on average per transaction.
RateCity found that despite the charges, the number of transactions made at foreign ATMs was increasing with consumers spending around $10 million more in 2012 compared to 2011 and $30 million more than in 2010.
Michelle Hutchison, spokeswoman for RateCity, said that for most Australians the foreign ATM fee is largely avoidable.
“We do need to take some responsibility for avoiding these fees. There’s simply no excuse in the major cities for using a foreign ATM. For example, downtown Sydney has over 1000 ATMs, representing most networks and institutions,” she said.
Hutchison said for people in some locations – such as outer suburbs and smaller regional centres – there might be minimal ATM access and no major supermarkets or cash-out Eftpos outlets.
She said the best ways to avoid these fees is planning and to avoid making lots of small transactions.
Legislative changes introduced in 2009 meant ATM customers had to be notified of the foreign ATM fee on the machine’s screen before the transaction was completed, and as a result the number of transactions at foreign ATMs plummeted.
“Legislation introduced to warn customers about fees at the ATM deterred us for a while, but convenience has outweighed cost and we’re getting back to our old ways and increasingly using foreign ATMs,” she said.
“Currently, four in every 10 ATM transactions is made at a machine not owned by our bank’s network and as a result we wasted more than $53 million in January.”
So how can we keep driving these costs down?
The big contributor will likely be ongoing Eftpos growth, she said. Almost 335 million transactions occurred via foreign ATMs in 2012.
“If just 10 percent of these switched to using cash out via Eftpos, we’d spend around $67 million less per year on ATM fees.”
A large chunk of this money could be kept by consumers with more careful planning and budgeting, she said. Many financial institutions now offer free ATM locator applications for smartphones, while others offer free transactions with the major banks’ ATM networks. To find out more visit RateCity and compare transaction accounts or ask your provider about how to reduce ATM fees.
“Let’s be clear $670 million is too much for Australians to be paying just to get cash we already own.”