Loanfactz Definitions

ATM

ATM stands for Automated Teller Machine. An ATM is an unattended, self-service electronic machine (Electronic Funds Transfer (EFT) terminal) located on bank premises or other locations, which you, the customer of a financial institution, may make deposits, withdrawals, account balance inquiries, or other transactions as you would through a bank teller person inside the bank.

ATM's are convenient anywhere and at anytime by using a * Debit Card or ATM Card issued by your bank with the entry of your personal identification number (PIN). Some ATM's charge a fee to use the service, usually if you are not a member of the bank. For example, withdrawing cash from an ATM that does not belong to your bank or that is not part of its multi-bank ATM "network" can cost you anywhere from 1 to 4 dollars per transaction. This amount may seem small, but these fees add up quickly over time.

Some Suggestions

• Try to use your own bank's ATMs whenever possible.
• Most all banks offer accounts with free ATM transactions to their own customers, but some institutions also have accounts that do charge their own customers an ATM fee. Look carefully at the fees and choose the type of account that best fits your needs.

• If you plan to use ATMs a lot, consider an account with free withdrawals from an institution with many convenient locations. If the account you choose is subject to ATM fees, you'll still pay less using your own bank's machine compared to going elsewhere and paying a second fee. But remember, if you're unable to use a surcharge-free machine, you could possibly face two charges - one from the ATM's owner, and the second from your own banking institution.
• Take precautions before using another institution's ATM. Look for an ATM indicating that it doesn't impose an "access fee" or "surcharge" to non-customers. Your bank might be able to provide the names of other institutions that won't charge you a fee. Or, go to one of several Internet sites that list surcharge-free ATMs.
• Become familiar with your own bank's fees for using another institution's ATMs. Some banks, for example, have agreements not to charge ATM fees to each others' customers.
• If you use ATMs a lot, consider withdrawing larger sums each time, for example, a single 100 dollar or 200 dollar ATM withdrawal instead of several 20 or 40 dollar withdrawals. You will save money spent on all those extra transaction fees.
• You can usually get cash back for FREE when you use your debit card to make purchases at the grocery store, the pharmacy or other businesses. Some stores will even cash a check free of charge or for a fee that would be less than what you would pay at an ATM.

Avoid ATM Related Mistakes That Can Trigger Bounced Check Fees

• "Don't forget" to record and deduct, in your checkbook, your cash withdrawals, store purchases, and any fees. Keeping your checkbook up to date is the most accurate way to maintain your correct account balance, letting you know the exact funds available to you.
• Don't rely on the ATM screen or receipt for information about how much money is left in your checking account. This figure would most likely be wrong, since the balance shown wouldn't include checks that you have previously written that haven't been cleared yet through your bank or debit card transactions that haven't been posted to your account.

Federal law requires that an ATM alert a non-customer about a surcharge before a transaction is completed.

Glossary For This Page
(In Alphabetical Order)

* Debit Card
A plastic card magnetically coded on the back, issued by your bank to you, that allows you to access your own money from your personal checking account or savings account electronically at an ATM, or to make purchases, withdrawals, or other types of electronic fund transfers with the entry of your personal identification number (PIN).

References:
Federal Deposit Insurance Corporation (FDIC)
Office of Inspector General
June 2004
www.fdic.gov

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