Research indicates that there are approximately 40 million unbanked individuals in the US. There are numerous reasons for this, ranging from negative experiences with banks to excessive fees to inconvenient operating hours. No matter the reason, many people turn to prepaid debit cards as a way to handle every day financial transactions. With a little research, consumers can find a prepaid card with low or no fees.
While technology has continued to diversify how we handle money, cash is still a very popular payment method. Customers will sometimes find themselves in need of a product or service from a merchant who only accepts cash. The need for cash in certain instances often sends cardholders to the nearest ATM, which is convenient but not necessarily cost-effective. Using an out-of-network ATM usually results in a fee from both the card issuer and the bank that maintains the ATM.
According to data from Bankrate, the average ATM withdrawal fee is $4.35, which represents a 5 percent increase over the prior year's average. This number can be lower or higher, and the amount of fees paid can add up fast if consumers aren't careful. Banks are reluctant to reduce fees, but savvy customers can avoid out-of-network fees. Given that fees aren’t likely to be reduced any time soon, here's how you can minimize ATM fees when using your prepaid card to get access to cash.
Take a Look at Your Card’s Fee Schedule
Whether you have a debit card connected to a checking account or a prepaid card, it’s always good to be aware of any associated fees, especially ATM fees. Prepaid debit card ATM fees vary widely, with some having no ATM access fees whatsoever, some offering a set number of free ATM transactions per month, and others charging up to $5 per withdrawal. For those who need to access cash on a regular basis, these fees can quickly add up.
Prior to obtaining a prepaid card, take a look at the card issuer’s website so you can see the associated fees and disclosures beforehand. Weigh the pros and cons and don’t be afraid to compare cards to find the one that is the most cost-effective. Not only should you evaluate the ATM fees, you should consider other fees, such as balance inquiry fees; how many ATMs are in the card issuer’s network; how close network ATMs are to where you live and work; and daily withdrawal limits, to name a few considerations.
Familiarize Yourself with the Card Issuer’s Network
As with any debit card, prepaid cards typically have network ATMs that allow cardholders to access money for free, or for a reduced fee. Each card’s website or mobile app will provide the type of network cardholders can use. Additionally, most will allow you to sort the list by location, so you can find the one closest to you.
While this is best done prior to signing up for a prepaid card, you can also get information on the card’s ATM network after you’ve already become a cardholder. This feature comes in handy when you find yourself in an unfamiliar area and are in need of cash.
Another way to avoid ATM fees is to plan your outings in advance so you don’t need emergency cash. Some opt to limit their ATM trips to once a week or less, rather than going daily and incurring a fee each time. This is a great way to stick to a budget and avoid ATM access fees at the same time.
Get Cash at the Point of Sale
One of the easiest ways to avoid ATM fees is to get cash back when making a purchase. Many stores allow customers to get cash back in amounts ranging from $5 up to $100, sometimes even more. In the event that the customer needs more cash back but still wants to avoid the ATM, they can either complete a separate transaction or get cash back at another retailer.
Getting cash back at a retailer is usually the most cost-effective way to get cash from your prepaid debit card. At the register, be sure to choose debit as your payment method and then input the amount of cash back you want. You will then have to confirm that the price of your merchandise plus the cash back amount is correct. Be mindful that some stores do charge a fee for getting cash back at the register, so it’s important to inquire beforehand before agreeing to any additional fees.
Most financial experts agree that paying ATM fees isn’t a smart use of money, so avoiding these fees is an important component of sound financial management. ATM fees may seem like a nominal amount if you’re in need of cash, but these fees can swiftly erode your balance. With proper planning and knowledge of the associated rules and fees for your prepaid debit card, you can save a lot of money and still get access to cash.
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