About ATM Machines

An ATM (automated teller machine) is a cash dispensing machine where people can use ATM cards or debit cards to withdraw money from their bank accounts. There are millions of ATM machines located around the globe and people can use these machines to access their accounts from any corner of the United States or the world.

Function

ATMs serve the primary purpose of allowing people to withdraw money from their bank accounts from virtually anywhere in the world. The machines work by reading the magnetic strip of an ATM or debit card. The customer inserts or swipes the card at the machine, which gathers information, including the account number, bank routing number, expiration date from the strip. Because all ATMs are connected to an interbank network, a machine in California can gather account information, including available balance, from a customer's bank in Florida. The customer verifies his or her identity by punching in a personal identification number (PIN) and makes the desired transaction from their account. For example, if they customer wishes to withdraw $100 they would enter that amount into the ATM, which would dispense the money along with a receipt.

Benefits

Because ATMs are available all over the world, they give people access to their money from anywhere. This is especially important for travelers who used to either have to carry large sums of cash or face the hassles of finding places to cash checks. ATMs eliminate the safety risk of carrying large amounts of money and also have the convenience of not needing to find a place to cash a check.
ATMs also have a benefit of being able to withdraw money when the bank is closed either at night or during weekends or holidays. There is also the benefit of being able to use a bank card to get money at a gas station that has an ATM. This is useful for people that do not use debit cards.

Types

The two types of ATMs are on-premise and off-premise. On-premise ATMs are located at a bank and are an extension of the branch's operations. Off-premise ATMs are not located at bank and are typically not operated by a financial institution. These are the ATMs located as restaurants, gas stations and hotels. These ATMs are often linked to the interbank network but have limited options available and are usually restricted to only withdrawing money. Off-premise ATMs are usually operated by private businesses.
In addition, there are host ATMs and foreign ATMs. Host ATMs are those operated by the card holder's bank or credit union whereas a foreign one is any other machine.

Features

People can perform a number of other account-related tasks at a host ATM. They can use the machines to verify account balances and transfer funds between accounts as well as make deposits. These features, with the exception of balance inquiry, are not available at foreign or off-premise ATMs.
ATMs also feature different denomination of bills available. Typically $20 bills are available in all ATMs but some have smaller denominations such as $10s or $5s. Some ATMs, such as ones in casinos, will have larger denominations such as $100.
The list of available bills is usually displayed on the screen and transactions can only be in increments of available bills. For example, if an ATM only has $20s and $100s available, you cannot withdraw $50.

Warning

Using ATMs, especially foreign ones can be costly. Nearly every ATM has a convenience charge of $1 to $3 debited from your account when you withdraw money from it. Typically this charge will not apply when you use a host ATM and some financial institutions, such as credit unions, have alliances with others so you can use their machines for free.
In addition, some banks charge you when you use a foreign ATM so you will be assessed this fee, typically $1 to $3, in addition to the charge directly from the foreign ATM. That means a $20 withdrawal at a foreign ATM could cost you as much as $26.