Banks Urged To Be Transparent On ATM Credit Card Cash Advance Fees

What are your credit card fees?

If I posed this question, you would likely quote a few numbers for me:

• annual or monthly fee
• purchase interest rate
• minimum payment amount
• late payment charges
• cash advance fee
• cash advance interest rate

The cash advance fee you state is likely the one outlined when you signed the paper work for the credit card. Somewhere in all that fine print it outlines that there will be a fee for withdrawing cash from your credit card. Chances are that fee is in the ballpark of 2% of the amount you withdraw.

Did you know that that fee is specific to withdrawals made in-branch or by using the cheques provided with your card?

What isn’t outlined in all that fine print is that you are likely to pay a whole lot more than just 2% for taking a cash advance through an ATM. The number listed in your credit card agreement says nothing about the charges you accrue at an ATM.

Reported on news.com.au recently was the frightening news that ATM owners will be setting their own fees! Chances are, for credit card cash advances, that fee will run somewhere between $10 and $20 per transaction! Christopher Zinn, spokesperson for Choice: The People’s Watchdog is credit with saying, “A cash advance at an ATM looks like it could be one of the most expensive transactions you can possibly make.”

Full Disclosure

Early in the year, some customers reported discovering huge ATM cash advance charges on their bills. Surprise, surprise!

However, the Australian Bankers’ Association reports that ATM owners will no longer be able to get away with hidden charges. As of March, 2009, all ATM owners are required to display their fee on the screen prior to processing your transaction.

Of course, it remains to be seen which banks will comply, how quickly, and whether those who are not in compliance will actually be penalized.

Some Statistics

• There are roughly 70,000 ATM cash withdrawals with a debit card every month.
• The number of cash advances from credit cards each month is 2,261,000.
• Those cash advances total roughly $863,000,000.
• In 2009, banks brought in over $1,434,000,000 in fees from credit cards.

Taken together, these stats indicate that credit card companies are bringing in mass amounts of money by customers using ATMs for cash advances.

• Over 2009/2010, cash withdrawals using ATMs declined, and those using EFTPOS went up.

This tells us that customers are getting wise to the cash grab techniques used by ATM owners and are finding other methods for getting their cash and paying for items.

Avoiding Huge Cash Advance Fees

While taking cash advances should be used sparingly as a means of keeping afloat, there are times when it cannot be avoided. We offer you a comprehensive comparison of low cash advance credit cards.

Here are a few other tips for taking cash advances and paying less in fees.

1. Use your own bank ATM as opposed to another bank’s machine or a privately-owned ATM (like those located in pubs, supermarkets, and service stations).
2. Use online banking and make a transfer of funds from your credit card account to your regular banking account.
3. Use telephone banking to do the same.
4. Go into your branch and visit a teller to make the cash withdrawal from your credit card.
5. Write yourself a cheque, using the credit card cheques provided for the purpose of cash advances.

Here are a few alternative to taking a cash advance from your credit card.

1. If you foresee that extra funds may be needed, use the credit card to pay a bill or make a necessary purchase, and use the cash in your account.
2. Consider a personal loan to meet your cash-flow needs.
3. Consider a payday loan.

The fact is, credit cards fees are multiplying year after year. Consumers are being nickled, dimed, and dollared to death. But you don’t need to be in the dark about the fees you’re paying. In fact, it’s against the law for banks and ATM owners to try and keep you in the dark. No more hidden cash advance fees! So expect full disclosure, and if you don’t get it – speak up.

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