In a world, where there is a rise of ecommerce, credit/debit card use, and mobile payment platforms, running to the ATM for cash is a thing of the past for many people. Cash is increasingly becoming expensive, even when accessed electronically.
Cash Is becoming More Expensive
Across the nation, consumers are charged $4.69 to withdraw money from a so-called out-of-network ATM. That’s up 2.6% from 2016. This is according to the latest data from Bankrate Inc., a New York City-based consumer-research firm.
Among the top 25 metropolitan areas, Pittsburgh residents faced the highest fees. Here are the top 5 metro areas with the highest average ATM fee, according to Bankrate:
- Pittsburgh: $5.19
2. New York: $5.14
3. Washington D.C.: $5.11
3. Cleveland: $5.11
5. Atlanta: $5.05
Bankrate reports that the fee has now reached a record high for the 11th consecutive year. In fact, it’s went up fully 55% over the last 10 years. During the mentioned period of time, debit cards increasingly became more popular in stores, as a result of which consumers started carrying as much cash as they once did.
So, the higher out-of-network fee is the result of reduced demand for cash at ATMs, as Greg McBride, chief financial analyst at Bankrate, notes.
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Out-of-Network Fee, Surcharge, and Overdraft
The out-of-network fee is comprised of 2 components:
- A fee imposed by the ATM owner, which is known as a surcharge and is significantly higher as compared to the 2nd one
- A separate charge from the cardholder’s bank, which is rising faster
The 1st one is $2.97 on average, which is up 2.4% in 2016, according to Bankrate. The 2nd one is $1.72, which is up 3%. Bankrate reports that both fees are all-time highs. McBride predicts surcharges will soon start going higher.
According to McBride, since fewer people are making out-of-network ATM withdrawals, the cost associated with maintaining that network is being spread over fewer transactions.
Based on a CNN Money analysis, the country’s 3 largest consumer banks made about $6.4 billion off of ATM and overdraft fees in 2016, which is nearly $300 million more than in 2015.
So, ATM fees aren’t the only fees that are going higher. Overdraft fees follow the same tendency across the country. The average overdraft fee across the banks studied by Bankrate reached $33.38 in 2017. No technological explanation is available concerning the reason. Banks depend on fees to make money, and overdrafts are a reliable source of income since everyone believes they’ll never overdraft again.