Out of Network ATM Costs Reach Record High

The average out-of-network ATM withdrawal cost reached a new record high of $4.72, according to the latest Bankrate.com Checking Account and ATM Fee Study, which surveyed non-interest and interest accounts.

This all-in fee, which includes the ATM surcharge (what ATM owners charge non-customers) as well as the penalty financial institutions charge their own customers to make out-of-network withdrawals is up 33% over the last decade.

Financial institutions are charging non-customers more than ever to use their ATMs. The average ATM surcharge increased 2% to a new record of $3.09, the 15th consecutive year establishing a new record. The average surcharge has increased in 20 of the past 21 years.

The good news, the fee charged by the accountholder’s own financial institution for using another institution’s ATM decreased 2% from $1.66 to $1.63, moving lower for the second year in a row. In fact, the number of financial institution and accounts allowing free out-of-network withdrawals is at a record high, although this still represents less than one-third of accounts (32%).

“While large banks have extensive ATM networks, many smaller banks and credit unions belong to nationwide fee-free alliances that may have significantly more ATMs available than even the ATM networks of big banks,” Greg McBride, CFA, Bankrate.com chief financial analyst said. “One other option to withdraw money for free is to get cash-back at the point of sale when using a debit card. Banks don’t charge for that and very few merchants do either.”

Among the findings:

• Houston has the highest average out-of-network ATM fee of the 25 major metro areas examined ($5.58), while Los Angeles has the lowest ($4.15). Philadelphia has the highest average overdraft fee ($35.50) and Cincinnati has the lowest ($30.95).
• Ninety-nine percent of non-interest checking accounts are either free by default or can become free, however less than half (42%) are free without stipulation. Forty-three percent will waive the monthly fee ($5.61, on average) based solely on direct deposit.

Another type of fee on the rise, the cost of overdrawing a checking account increased for the 19th time in 21 years. The current average cost for non-sufficient funds sits at $33.36, just shy of the record of $33.38 set in 2017. The most common fee remains $35 for the 11th year in a row.

“Avoiding costly overdraft fees requires keeping close tabs on your checking account balance, and specifically the amount available for immediate withdrawal,” McBride added. “Slip-ups occur, so put in a line of defense by establishing a link between your checking account and savings account at the same bank so that money is immediately transferred into the checking account to cover any shortfall.

“For those with more than the occasional overdraft, an increasing number of fintech companies and neobanks are offering accounts that do not charge overdrafts and are worth considering.”

Just 7% of interest checking accounts are free by default. While 73% waive the service fee ($15.05, on average) with a minimum balance requirement – either across accounts or within the checking account itself – the average threshold is a hefty $7,123, up nearly 13% from last year. Unlike non-interest accounts, just 18% of interest accounts will waive the fee with direct deposit alone. Interest earnings on checking accounts remain negligible, with yields averaging just .06%.

McBride recommended looking for a free account without a balance requirement to take care of necessary living expenses. Any additional rainy-day funds should go into a high yield savings account for more substantial returns.