It’s Called Currency

Have you ever thought about the fee they take with that cash withdrawal in terms of the percentage of the transaction? Most people don’t. Folks pay $2 or $3 and think nothing of it. But if you’re getting $10 out of the ATM and you pay a $3 fee for it, you just paid 30% for getting YOUR OWN MONEY. And unless you’re lucky enough to bank where they will reimburse you those fees, you’ll never get that money back.

I bank with USAA which is a bank for the military and as a former military dependent, I’m eligible for membership. (Actually, I think USAA started out just insuring members of the armed services, but they’ve also had a bank for quite a number of years. Check their website to see if you’re eligible too. You won’t regret it. Their insurance rates are excellent also.) USAA refunds up to $15 in ATM fees each month, which is rare. They do this because they don’t have branches all over the US where you can get money. They know that you will have to pay a fee and they want you to keep your money. Yes, for a bank, that’s extremely rare.

Most banks today will try to double-whammy you on ATM fees. They know they can collect fees without hitting any local or federal laws on loan sharking. If they called it interest, they’d not be able to legally do it. But you should think of it like you do interest. Ask, “What’s the percentage I’m having to pay for this money?” You’re better off paying $2 on $50 than on $10. Honestly, unless you know the fee will be refunded, you probably shouldn’t be taking less than three digits out of an ATM.

If you need to get small amounts of cash, consider doing it as a cash back purchase using your debit card at a store. You can pick up your weekly groceries and your spending money at the same time. Not only will it save the gas you’d spend driving to the bank, but it will save you that fee.

If you’re not eligible for USAA, you can look at ING Direct, which has an extensive network of fee-free ATM machines throughout the USA. I’ve got a savings account with them because of their excellent interest rates. (More on that in another post.) There are also a few other banks that refund a certain amount of fees each month (usually in the neighborhood of $6). An internet search will help you find one, I’m sure.

Of course, if you’re able to bank where you live, you may not encounter fees for withdrawals because you’re able to use your bank’s ATM machines. If that’s your situation, congratulate yourself on being a smart cookie, but remember these tips if you should find yourself in another town and in need of cash.

Tags: cashflow management, saving, spending less // Add Comment »