Finding Free ATMs


When ATMs first appeared about 20 years ago, not many people used them. Banks had to resort to promotional gimmicks to get anyone to try these newfangled and frightening machines. All transactions were free. Historians now refer to those early days as "The Golden Age of ATMs."

Sigh. With all the fees attached to them today, ATMs, although more plentiful, exist more as a profit center for banks than as a service to their customers.

How Did We Get Here?

One of the primary reasons you probably have a banking account is so that you have something to take out of all those friendly ATMs that are now on every street corner. And banks are quite happy about that. Banks discourage their customers from making transactions with a live teller (sometimes by charging as much as $8 for a face-to-face encounter), because that involves paying somebody to smile at you while they're helping you out. It costs banks about 27 cents to have a deposit or withdrawal processed at an ATM machine, but about $1.07 to handle the same transaction by a live teller.

But there's another reason that banks love to have people go to ATMs -- the fees that can be charged. Today, U.S. banks are taking in a pretty penny in fees every year, as people are not paying very close attention to the fees associated with using the ATMs. After all, it's just a dollar here, a dollar there, right? Wrong.

The Center for Responsive Law estimates that banks today make more than $2 billion on ATM transactions. That total is going up rapidly, as banks have seen fit to continually raise the amounts they charge customers for the privilege of using the ATMs. Furthermore, nowadays it isn't just your bank that's socking you with a fee -- if you aren't using one of your own bank's actual ATMs, the other bank is probably hitting you up as well.

There isn't too much you need to know about ATMs except how to avoid incurring fees when you use them. (You also need to remember to wait for your card to come back out after you've been given the money. But, really, you already knew that.) To avoid fees, simply bank at an institution that doesn't charge you when you use your ATM card at a foreign institution, and learn where the free foreign ATMs are.

The most likely banking institutions to offer totally free ATM transactions with a checking or savings account are credit unions, smaller local banks, and Internet-based banks.

Which Machines Are the Mean Ones?

Yes, some ATMs are your friends, and some are your enemies. ATMs come in basically three flavors:

  • Proprietary: The ones your bank owns. It is a rare bank indeed that charges its own customers to use its ATMs, but it's far from unheard of. Approximately 10% of all banks now charge their own customers for using the ATM. The ones that do charge tend to have a fee of around $1.
  • Non-Proprietary: All the machines that belong to somebody other than your bank. These will charge you about $1 to $1.50 to make your transaction, and they'll post that they're imposing a fee either on the "welcome" screen or else with a sticker on the machine itself. But wait, there's more! Your own bank is probably charging you a similar fee for not using its own network. Find out how much your bank charges for this, but generally expect to be out about $3 between the fee from the ATM you're using and your own bank's fee.
  • National ATM: The bank is hooked up to a regional or national network, such as Cirrus, Plus, NYCE, Interlink, or others. When you use these out-of-town networks, expect that the fee will be no less than $1.50, and possibly as high as $3. Then add the fee that your bank is charging you.

Hey, every ATM dispenses cash in the same way -- they all provide the same service. What you really need to know, Fool, is which machines won't charge you, and whether your bank charges you. If you often find yourself using non-proprietary or national ATMs, then you'd better figure out just how much your bank is charging you per year and decide whether you aren't better off banking with an establishment that doesn't hit you with charges.

More and more, free ATMs are cropping up at convenience stores as a way to lure people in. (But don't assume that the machine is free -- make sure by reading the "welcome" screen and any stickers on the machine.) Here is a list of Web links to research free ATMs in your area:
Illinois, California, Florida, Iowa, Kansas, North Carolina, Virginia, and Wisconsin
Arizona, California, Colorado, Florida, Idaho, Maryland, North Carolina, New Hampshire, Nevada, Ohio, Oregon, Texas, Utah, Virginia, Washington, and Wisconsin
Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Texas

More links to free ATMs.

Knowing where the free ATMs are is especially important if you have opened or are thinking of opening an account with an Internet bank -- because those Internet-based banks won't have proprietary ATMs.

Next we look at the ins and outs of credit unions.

Next: Are Credit Unions Foolish? »« Previous