Why Do Banks Charge Money for Using Their ATM Machines?

Save

An ATM or Automated Teller Machine is a convenient way to get money using a debit card; however, the fees that banks charge for withdrawing money can become expensive.

Features

  • ATMs frequently charge fees to users who are not account holders of the financial institution for withdrawing or depositing money as well as performing balance inquiries. The average ATM fee ranges from $1.50 to $2, according to Bankrate.com.

Costs

  • One of the reasons that banks charge fees is to compensate for the costs associated with owning and operating the machine. Each ATM transaction costs a bank around 27 cents, according to StopATMFees.com.

Interchange

  • Whenever you use your ATM card at a financial institution other than the one that houses your accounts, your bank has to pay the other bank a fee known as interchange, which is between 30 cents and 65 cents. Another reason that banks charge fees to non-account holders is to recoup some of the money they must pay to other banks for interchange.

Fee Revenue

  • Like other types of businesses, banks and other financial institutions must be profitable in order to remain in business. Fee revenue from ATM transactions is one way for banks to make money.

Solutions

  • Many banks partner with other local banks or nationwide networks, agreeing not to charge foreign ATM fees to each other's clients. If your bank does not participate in a similar program or if you are not near any free ATMs, considering using your debit card at a discount or grocery store and asking for cash back as this usually does not charge a fee.

References

Promoted By Zergnet

Comments

You May Also Like

  • How Do Banks Make Money from Credit Cards?

    Like any other corporation, banks must generate revenue to keep in business. A bank does this, according to the Federal Trade Commission,...

  • How Do Banks Create Money by Making Loans?

    Banks borrow money from customers by offering them interest in return for depositing funds in certificates of deposit and savings accounts. The...

  • What Are the Benefits of Owning My Own ATM Machine?

    When a business owner determines that an ATM machine will benefit his customers, he can either lease the machine from a bank...

  • How to Compare ATM Bank Fees

    Charging fees for using an automatic teller machine (ATM) at a bank or other location is a way for financial institutions to...

  • How to Make Money With ATM Machines

    Automatic teller machines (ATMs) provide a number of ways for entrepreneurs to make money. For example, some entrepreneurs earn commissions from the...

  • ATM Bank Regulations

    Government regulations relating to bank automated teller machines (ATMs) apply to any transactions you conduct on a bank ATM. The Federal Reserve...

  • How Do ATM Cards Work?

    ATM cards work by having an embedded chip in them that allows an individual to retrieve funds from any automatic teller machine...

Related Searches

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!