ATM fees are 'completely avoidable,' expert says — here are 3 tips for dodging them

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Withdrawing money from an ATM that's out-of-network is more expensive than ever. The average withdrawal fee hit a record $4.72, an increase of 33% over the last decade, according to a recent Bankrate survey of 10 financial institutions in each of 25 large U.S. markets.

But you don't have to pay money to access money. "ATM fees are completely avoidable," says Greg McBride, chief financial analyst and senior vice president at "Having money needlessly drained out of your account by repeatedly going to out-of-network ATMs is indicative of other sloppy financial habits that may be inhibiting your progress."

Sidestepping unnecessary fees at the ATM can become even more challenging as you approach holiday travel season, since ATM charges vary depending on your location. Still, if you plan ahead and follow McBride's three tips, he says, it will be easy to dodge surcharges and save money.

1. Look into smaller banks and credit unions

To avoid ATM fees, make ATM withdrawals within your bank's network. "Just like health insurance, if you go outside your bank's network, it's going to cost you," says McBride. And, if you're away from home, locating an in-network bank in unfamiliar territory can be difficult and even more expensive.

To gain access to more ATMs, McBride suggests looking into accounts offered by credit unions and smaller banks, since they tend to make more machines available than bigger banks. In order to stay competitive, many smaller banks and credit unions belong to nationwide fee-free ATM alliances, and "that literally opens up tens of thousands of ATMs around the country you can use for free," says McBride.

Locating the nearest no-fee ATM is as easy as checking your bank's website, downloading the bank's app, or calling customer service, he says.

How the pain of paying can affect your spending

2. Use your debit card to get cash back

If you're really in a pinch for cash and you can't get to an in-network ATM, you still have options. You can avoid fees by getting cash back when paying with your debit card, for example, McBride says. Most grocery stores and pharmacies offer the option for free. "Banks don't charge for that, and very few merchants do either."

Cash back makes sense if you're in a pinch, but don't make it a habit, says McBride. Using your debit card often means you're missing out on purchase protection. You might also be missing out on rewards that can help you save money in the long run, like extra cash back on groceries or frequent flyer miles.

Just like health insurance, if you go outside your bank's network, it's going to cost you.
Greg McBride
chief financial analyst and senior vice president

3. Explore nontraditional banks

One of the primary reasons ATM fees continue to climb is because it's easier than ever to avoid cash, says McBride. The operators of ATMs rely on the income they receive from fees. Because of financial technology companies like Venmo, banks are seeing fewer customers and, in turn, losing money.

Depending on your banking habits, it could make sense to switch to a digital bank that operates without any branches, and offers digital- or mobile-only financial services. Because these banks don't have brick-and-mortar costs like traditional financial firms, they tend to offer accounts with higher savings rates and lower fees — including low-fee or free ATM access.

Ally bank, for example, offers customers free access through the Allpoint ATM network, which has 55,000 locations worldwide. It also reimburses up to $10 each statement cycle for fees charged at out-of-network ATMs.

Smart cash moves like these can keep more money in your account to keep you moving toward your financial goals.

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