Kids And Finances

Teens And Money: A Lesson in ATM Fees

I was looking through my son’s bank transactions recently when I noticed something that required a discussion. I saw that he had withdrawn money from his account, and was charged a $2.50 ATM fee.   When he received his debit card, I explained that he had easy access to his account using an ATM and his PIN, but we hadn’t talked about how to avoid fees.

He knew he had paid the fee, as a message had popped up on the ATM. At that moment he didn’t think he had a choice because he was in a hurry and needed cash. He didn’t know that withdrawing cash from an ATM might actually cost him money. In fact, he was double surprised at the message because there was a sign on the convenience store he was in that stated, “No Fee ATM.”

I explained to him a few of the finer points of using an ATM.

Bank Fees vs. ATM Owner Fee

There are two different ways that a person can be charged a fee when using an ATM:

• The ATM Owner : Someone owns the ATM. That entity makes money by charging people a convenience fee to use the ATM. The sign he saw on the outside of the convenience store was stating that the ATM owner did not charge any fees to use the ATM.
• Bank : The bank which issues his ATM card, and where his checking account resides, can also charge a fee when he withdraws cash from an ATM that isn’t owned by the bank. That’s what happened in this case; his bank charged him $2.50 to get his money from an out of network ATM. Some banks advertise not charging ATM fees at all. Unfortunately, our bank is not one of them.

Avoiding ATM Fees

Now that he knows that our bank charges a fee to withdraw cash from an out of network ATM, he can take steps to avoid these fees.

• Know ATM Locations: Our bank has branches near our home, his school, and even his workplace. He needs to familiarize himself with where they are.
• Plan Ahead:   Sometimes there are special circumstances, but plan to withdraw cash on a certain day of the week that will last you until the next week. Build some extra time into the schedule to be able to stop by an in network ATM.

To help the lesson really sink in, I did a little math. If he was charged a $2.50 fee every week when he went to the ATM, that’s roughly $10 a month, or $120 a year. He would have to work about 12 hours to earn that $120. Was he willing to work 12 hours just to pay for ATM fees? I saw his eyes widen a little bit as he shook his head.

I think he got the message.

Do you plan ahead to avoid paying ATM fees, or do you just view it as a convenience worth paying for?

Brought to you courtesy of Brock

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Brock Kernin

Brock is a software engineer by day and personal finance blogger at night. He is a fitness junkie and enjoys grilling and smoking meat. Married with two children,  Brock strives to improve his skills as a husband and father, and is always on the lookout to stretch his family’s budget as far as he can.