Losing Money By Foreign ATM Fees

by Dual Income No Kids on October 15, 2009 · 0 comments


Don’t you hate wasting money? I focus a lot of my energy on not buying things; resisting the temptation to go out and spend money if I don’t need something or if I haven’t spent time thinking the purchase through. Although, as you can tell from the graphic above, my finances do have a leaky faucet, and that is in my use of ATMs.

According to the Quicken report that I ran to generate that picture, I have paid, this year alone, $64 in foreign ATM fees. These are fees that my bank charges me to use an ATM that they don’t own (nice how they raised the fee from $2 to $2.50 in April, isn’t it?). That doesn’t include the fee that those ATMs charge me for accessing an account not associated with those ATMs. Let’s assume for the sake of simplicity that those fees are $2 each (although the average is almost certainly higher). That’s an additional total charge of $56; so in total, I’ve unnecessarily spent at least $120 this year when withdrawing money from ATMs. Ouch…

Most of my cash withdraws happened at the beginning of the year, when I had to have cash on hand for trips up to school when I had class or various meetings with the Dean or my advisor. Parking at my school costs me around $15 per stay; plus if I go in the District for a hockey game or to visit friends, it’s handy to have cash available in case I need a taxi or the parking lot doesn’t take credit cards. Because I like to use my credit card for as many of my purchases as possible (I get good rewards, it’s easier to track, etc…; obviously this is a heatedly debated within the personal finance community, but I’ll save my justifications for a later post) I don’t often have cash on hand. Which forces me to make another trip to the ATM, where I’ll get hit yet again with a double dose of ATM fees.

Why don’t I just use my bank’s ATMs? Well, my rationalization is that they don’t have ATMs in convenient areas, and I’m too often pressed for time and thus unable to spend the extra time hunting one done. However, I know this is a weak rationalization. There are ATMs from my bank around, and although they’re not directly on my way most of the time, they’re usually not too far. It appears laziness is the driving factor in this case. It can be easy to justify unnecessarily spending less than $5 in fees so that I don’t have to go out of my way (after all, it’s just $5, right?). However, that money adds up quite quickly, and the next thing I know, it’s the middle of October and I’ve burnt over $120 when I really didn’t need to.

Of course, there are a few things I can do going forward to mitigate this issue (and readers, I’d be interested to hear your suggestions).

The first, and most obvious, solution, would be to just take the time to find and go to an ATM operated by my bank. Although that won’t always be possible (especially if I’m traveling out of state, which I have to do at least once a month; my bank is regional, unfortunately), it is possible most of the time and doing so could greatly reduce that expense.

Secondly, I could budget better for my monthly cash expenses. It wouldn’t be too hard – I’d have to give myself some flex cash to account for unexpected expenses – and I could just make one trip to my bank to withdraw money per month. The danger with that is I would have to be disciplined about keeping that cash, and I would have to decide if I wanted to take on that added risk of carrying a reasonable amount of cash in my wallet, balanced with leaving it at home and not having it when I need it.

Third, I could switch banks. I could go to a more national bank, or one that doesn’t charge a fee for using a foreign ATM and maybe even repays (to a certain level) fees doled out by those foreign ATMs. However, switching banks can be a hassle, and it wouldn’t necessarily fix the problem.

I think what it comes down to is better planning and discipline. Regardless of what I do, I need to greatly reduce this figure. I can think of a whole host of things I’d rather spend $120 on than just giving it to a bank as punishment for using (or not using) their ATM!

-Michael
Twitter: @michael_dink

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