CHOICE slams foreign ATM fees

A new report jointly published by CHOICE confirms the need for greater transparency around ATM fees.
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Users of foreign ATMs are being charged as much of $4 for the privilege of using a rival's teller (see table below), despite ATM reforms imposed by the Reserve Bank of Australia (RBA) two years ago. The reforms were meant to create more transparency and greater competition, with the aim of reducing fees. However, a new report jointly published by CHOICE and The Australia Insitute confirms consumers continue to get ripped off when they visit so-called “foreign” ATMs – machines from a bank other than their own.

The reforms required ATM owners to inform users of charges before they complete a transaction. It was certainly a step in the right direction, but it clearly hasn't gone far enough. According to The Australia Institute, Australian consumers are still spending more than $750 million per year on ATM fees even though 82% say they are unfair. Most of these unfair fees hit younger consumers, with 40% of those 18 to 24 reporting that they have paid a foreign ATM fee in the previous week. CHOICE and The Australia Institute are calling on the Treasury-RBA taskforce on ATMs to take stronger measures.

Video: ATM Rip Off

CHOICE takes a stand against exorbitant ATM charges.

Loud and clear labelling

As part of our ongoing Better Banking campaign, CHOICE has jointly published a new report with The Australia Institute, The price of disloyalty: Why competition has failed to lower ATM fees. CHOICE believes that ATM fees are excessive and unfair and need to be revisited by the government's taskforce on ATMs before it hands down its review this June.

Specifically, CHOICE wants:
•ATM owners to display the cost of third-party transactions in bold lettering on the outside of their machines.
•Abolish $2 fees for balance enquiries.
•We are also calling for regulators to collect and publish regular information on the location, costs and revenue generated by ATMs.

How to avoid getting fleeced

Being charged to access your own money when using an ATM is like paying for something you already own – and it provides the banks with hundreds of millions of dollars of additional revenue each year. ATM fees can add up quickly, but you can fight back by adhering to the following ATM guidelines.

Know your terrain Find out the nearest ATM that is part of your bank’s network. Usually this information is available on your provider’s website.

Be prepared Plan the amount of cash you will need in advance. That way, you can draw out the amount you require from your own bank’s ATM or by using the ‘cash out’ function when using EFTPOS.

Watch your balance Most ATMs treat a balance enquiry as a separate transaction, which means you can actually be charged twice if you do an enquiry followed by a withdrawal or vice versa. Instead, check your balance using internet banking or by asking for a receipt with your withdrawal.

Stay equipped If you have trouble getting to your own bank’s ATM, consider ING’s Everyday Orange account that allows you to avoid fees when drawing out $200 or more. The account also comes with the benefit of no monthly fee.

The breakdown

Below is a table of foreign ATM charges by some prominent institutions.

Foreign ATM charges
ATM Network Cash Withdrawal Fee Balance Enquiry Fee
ANZ $2.00 $2.00
Bankwest $2.00 $2.00
Bendigo Bank $2.00 $2.00
Cashcard $2.00 $2.00
CashConnect $2.00 $1.00
Citibank $2.50 $2.00
Commonwealth Bank $2.00 $2.00
Eco Cash $2.00 $2.00
HSBC $1.50 $0.50
NAB $1.50 $0.50
RediATM $2.00 $1.00
St George $2.00 $2.00
Suncorp $2.00 $2.00
Westpac $2.00 $2.00

Note: charges may vary depending on ATM location and time of enquiry
Data correct as at 16 February 2011

Calling on Canberra

This is a particularly timely report, since the government's taskforce on ATMs is due to hand down its review this June. We hope that report reflects the disturbing fact that banks continue to reap considerable profits at the expense of consumers making routine banking transactions. 

The Australia Institute Deputy Director Josh Fear says, “There is only so much consumers can do to avoid these fees. If someone checks their balance before withdrawing cash, they can be charged a double whammy fee of $4. This penalises people for staying informed about their financial situation and therefore discourages good financial behaviour.”

Both CHOICE and The Australia Institute believe the government’s contention that ATM fees would come down as result of competition has proven unfounded. In the RBA’s own words, in fact, the $2 fee has become a “benchmark”.

“Competition has failed to bring down the cost of ATM fees and this doesn’t look like it’s going to change in the near future,” Mr Fear said. “But there are options available to policy-makers who want to give Australian consumers a fairer deal when it comes to accessing their own money.”

Your say

CHOICE Better Banking campaign director Richard Lloyd says “Consumers tell us that ATM fees are excessive and unfair. They are told of the charge too late in the process. Whilst the reforms have encouraged more people to use their own bank’s ATMs, customers have not seen a decrease in the $2 fee for foreign transactions. And for people who check their balance before making a withdrawal at the same ATM the total charge is often a complete rip-off at $4.”



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