why is there an ATM withdrawal fee in the US?

December 4, 2005 9:42 AM

i live in boston. i love to travel. why is it that when i go to spain or italy or australia or new zealand, or even fiji, there is no fee to withdraw money from an ATM, but when i go to portland, ME, a mere 100 miles north, the ATM withdrawal fee is always $1-$2?
posted by brandz to travel & transportation (27 comments total)

The fee is probably built into the exchange rate.
posted by ZenMasterThis at 9:45 AM on December 4, 2005

Could be a bank-specific policy. Whenever I used my ATM card overseas I was charged for the privilege.
posted by Civil_Disobedient at 9:56 AM on December 4, 2005

Because they can.
posted by Orb2069 at 10:26 AM on December 4, 2005

The fees are really bad in Boston, for those of us who don't have national big-branch banks, so it's not as though Maine has a monopoly on this sort of thing.
posted by jenovus at 10:29 AM on December 4, 2005

*have accounts at
posted by jenovus at 10:30 AM on December 4, 2005

I live in New York and go to college near Boston. Not only do I get hit with withdrawal fees from Bank of America, but my bank (HSBC) charges me for using someone else's ATM. Upshot: $3-4 each time I try to get money. I think I might just switch to Bank of America.
posted by danb at 10:38 AM on December 4, 2005

There do exist banks that will refund all ATM fees, but you have to look for them. E*Trade is one ($5k balance required)..
posted by blue mustard at 10:41 AM on December 4, 2005

Like a lot of questions on AxMe, this one could do with some clarification, since the OP is probably making assumptions.

brandz, what bank are you using? What kind of card are you withdrawing on?

I've never managed to use an ATM overseas without incurring charges. A lot of people seem to believe you can withdraw money and get a good exchange rate by using a debit card in an overseas ATM, and this may have been true a while back; but in my experience, it's no longer the case. I'm just back from a month in Europe, and using a Washington Mutual debit card in Germany resulted in $3 or $4 fees. (A datum from my pre-trip research was a USAA card had no fees, but only US Service people can get those.)

As for fees incurred stateside, I wouldn't know -- I always use my own bank's ATMs, and deliberately choose banks with wide coverage.
posted by Rash at 10:45 AM on December 4, 2005

USAA refunds maybe five of those charges a month. I believe you have to be in the service or be the spouse or child of someone who was. Also, they are in San Antonio so if you aren't there you have to mail in checks to be deposited which takes a little time.

As far as charging fees at ATMs it's bullshit but not enough people complained when they started doing it.
posted by 6550 at 10:47 AM on December 4, 2005

Is E*Trade any good? I always get charged for fees because I don't belong to BoA, Commerce or one of the other two national chains. $5,000 is kind of a bitch -- but I guess it's a good way for me to save.
posted by geoff. at 10:56 AM on December 4, 2005

Rash is correct, you're often not asked to approve the fee like you are in the states, but using an ATM card abroad frequently results in a fee.
posted by allen.spaulding at 11:00 AM on December 4, 2005

One of my credit cards is now doing something new and annoying. They include the foreign usage fees as a single line item on the bill: "PURCHASES*FINANCE CHARGE*FOREIGN TRANS". It only shows up on the closing date, so it's a bit of a surprise.
posted by smackfu at 11:03 AM on December 4, 2005

Banks in most of Europe are not allowed to charge you a fee for using their ATMs. Using and ATM card there often results in a fee from your US bank, but not the foreign bank.
posted by fshgrl at 11:33 AM on December 4, 2005

State Farm Bank offers a checking account that rebates up to 5 ATM charges a month with just a $100 minimum balance (or direct deposit of a paycheck). However it's only up to $1.50 a shot.
posted by kindall at 11:37 AM on December 4, 2005

USAA could indeed be the solution to this problem, as suggested above, and it is open to non-military people. No military family members or subterfuge required either.

Just call them. They will take a few minutes of your time and then give you the info you need to continue opening an account online.

I cannot find a public link on their web site to the benefits they offer, but they include free ATM withdrawals worldwide and ATM fee refunds when using other banks' ATMs — up to $15 a month.

I can't remember what their minimum checking balance is. But it definitely is not $5K.

It is true that they are bank-by-mail (and online). So if you use a lot of paper checks, that may be a drawback. On the other hand, they pay the postage on the deposit envelopes.
posted by veggieboy at 11:53 AM on December 4, 2005

$5k balance required

Which brings up another trend: less and less interest earned on checking accounts. Used to be, on the higher-dollar checking accounts they gave you 3 or 4% of interest. On a $5000 balance that's about $15 per month, probably enough to offset any ATM charges and helps to dull the pain of not properly investing that money.

But these days I've noticed that my "interest checking" account is earning all of ... 0.1% (0.001 multiplier) per year. On the same $5000 balance, that's $5 PER YEAR. Gee, thanks. I could expect to make about $400 with that $5000 in typical investments.

[OTOH, ever since Bush raped the Treasury the stock market has been at 0% growth anyway ...]

Anyway, back to the topic, consider a credit union. They try harder not to screw you.
posted by intermod at 12:08 PM on December 4, 2005

To clarify veggieboy's answer: To get property or casualty insurance from USAA, you have to have a military affiliation.

However, anyone can bank with USAA, even those with no military affiliation at all. Just call 1-800-531-2265 and ask for a member number to gain access to the full website. (The posting has a lot more info on USAA checking accounts.)

One of the nice things about USAA is that it's a non-profit, not a publicly traded financial institution.
posted by WestCoaster at 12:15 PM on December 4, 2005

WestCoaster, thanks for clearing up the USAA issue. If the mailing of paper checks isn't a big deal I recommend them.
posted by 6550 at 1:09 PM on December 4, 2005

Why ? In a simple word -- Greed. Although you must take into account the cost of the service. In my opinion, we should allow a "fair" rate of return for international transactions to account for money exchange and transactions although not those which do not require exchange rate transactions. My opinion only...
posted by orlin at 1:34 PM on December 4, 2005

brandz, what bank are you using? What kind of card are you withdrawing on?

it's a standard bank card from citizen's bank. i've had it for years. after further inspection i see it is a debit card and a charge card (mastercard). i only ever use it to withdraw money from an ATM. either the fee is built into the exchange rate as noted by ZenMasterThis or this is standard banking policy in the US to ripoff the consumer.
posted by brandz at 1:38 PM on December 4, 2005

I'd like to throw in my vote for USAA too. They are absolutely the best financial institution I have ever done business with. They refund up to $15 a month in ATM fees (this has changed - they used to do up to 10 transactions a month, but they probably had to change it due to the rising charges from other banks' ATMs).

They also give you 1/2 percent back for purchases made with the debit card, free checks, no monthly fees, etc. And their customer service is excellent.
posted by bedhead at 3:14 PM on December 4, 2005

As far as I know, with the development of the EU and the change to the Euro, European regulations restricted fees on ATMs as a benefit to their citizens. Sure there's greed in the US, but my guess is that European banks would have fees if they could.
posted by pithy comment at 3:18 PM on December 4, 2005

I believe that Citizen's bank is part of the SUM ATM network, which means that there are no ATM fees if you use an ATM with the SUM logo on it. Most regional and local banks in new england are on the SUM network. I live in new england and regularly use other ATMs at banks other than my own without ever paying a fee: I just make sure to only deal with SUM network ATMs.

Note that Bank of America/Fleet is not part of SUM.
posted by Common Sense at 4:52 PM on December 4, 2005

Compass Bank also refunds all ATM fees and charges none of their own, without any major limits. (You do have to send in the receipts, though, I think.)

Still, if you're using another ATM multiple times a month, it might be worth the $10-$20 saved to switch banks and mail it in.
posted by disillusioned at 6:38 PM on December 4, 2005

Stop whining. In South Africa, they charge a fee when you DEPOSIT money, as well as every other transaction. Fortunately, free transactions come with a fairly low balance.
posted by Goofyy at 4:45 AM on December 5, 2005

If you're using a foreign credit card or ATM card in the US, you'll often have the fees waived. (The exception: those small independent ATMs you'll find in stores or gas stations, where the fees are usually the most exhorbitant.)

On the bigger question: by comparison with their European counterparts, American banks and banking practices come across as a bit old-fashioned. State banking laws have kept banks localised, and we're only now seeing the kind of consolidation that will lead to a handful of large, nationwide banks. When that happens, chances are that you'll see ATM fees go, since the fees accrued by BigBanks 1-5 will pretty much cancel themselves out, and become disadvantageous when seeking new customers.

(This piece on cash machine fees in the UK notes that while banks are still loathe to implement fees, the rise of 'convenience' ATMs with fees may establish a precedent to do so.)
posted by holgate at 7:22 AM on December 5, 2005

You can blame the late-80s congress for bank fees. Previously the banks had to negotiate with each other and the power of collective bargaining kept the fees low. It was more common for the banks to charge their own customers for their own ATMs but the fees were fairly low. Once the banks could start directly anally raping consumers who were not their customers all the bets were off. The only arguably positive result was independent ATM machines that are all over the place - you wouldn't see those no-cash machines in little markets that allow you to get the cash from the cashier with a receipt if not for this measure. Personally I don't think that would be any big loss but maybe some people love them.
posted by phearlez at 9:37 AM on December 5, 2005