Five ways to outwit the ATM
Sure, it’s great to be able to get cash whenever you want. The problem is, well, you can get cash whenever you want. Not only do you get hooked on instant access, you may not use the money wisely once it’s in your hand.
Notice how $20 bills have become the coin of the realm, as it were? (I’ve even seen little kids use them to pay for candy bars, which is just scary.) Once that $20 is broken, what are the chances that you’ll take pains not to waste the rest?
In the past year I’ve heard the same issue from a number of financial coaches and budgeting experts: Too many clients withdraw $20, $40, $60 or more but can’t really account for how it was spent.
To make matters worse, banks are hiking their ATM fees, to as high as $5 for a non-customer transaction — and on the other end, too, as your own bank penalizes you for going out of network. Imagine paying $6 or more for the privilege of withdrawing $20. (Dude, make it $200 because I have a genuine Rolex I’d love to sell you at way below retail, today only.)
These five suggestions will help you resist the siren call of “Easy money! Just enter your PIN!”
Be Your Own Cash Machine
This is a two-part process. On payday, withdraw — from your own bank’s ATM — as much as you think you’ll need until next payday. To find that magic number, simply consult your budget. If you don’t have a budget, make one; Gail Vaz-Oxlade’s article on GRS is a good way to start.
Tip: If the B-word sounds punitive to you, then call it a “spending plan.” Call it Billy Bob if you want. Just make one.
Naturally there will come the week when you pay for a child’s field trip, hit a Saturday yard sale, or break down and buy snacks at the movies. You’re out of cash by Tuesday and you don’t get paid until Friday. Time for the other half of the equation: The coffee-can ATM, aka the cash cache.
Figure out an amount you’re comfortable having around the house. (I shoot for $200, but the amount waxes and wanes.) Next, figure out a really superb hiding place. Remember that burglars will almost always empty out desk and dresser drawers, and one of the first places they’ll look is under the mattress.
Tip Don’t make the hiding place so clever that even you can’t find it.
Suppose you haven’t built your at-home ATM, or suppose you’re far from home when you become cash-poor. Discipline yourself to use only an in-network machine:
- Make a mental map of ATMs in your region. It wouldn’t hurt to keep locations written on a 3-by-5 card in your wallet or the glove compartment.
- Get one of those free phone apps that will locate the closest no-fee machine.
- Call the customer service number on the card and see if you can get a human being to help you.
However: Before you seek budgetary backup, determine if it’s really necessary. School yourself to think about withdrawals in a logical, methodical way, i.e., to avoid them whenever possible. Which leads us to…
Ask Yourself Exactly What You’ll be Using It for
“I just want some extra cash for the rummage sale/street fair/strip club” is not the correct answer.
How much can you afford to spend in any of those places? Will you be withdrawing this cash from the “household” or “entertainment” portion of your budget, or will you conveniently forget the extra drain on your funds?
If you can’t account for it, don’t take it out.
Hint: A $5 funnel cake at the street fair is a want, not a need. If you decide to buy one, make sure it’s deducted from your “fun money” budget later. Because let’s face it: Funnel cakes really are fun.
Too late! I already took it out!
Then put it back, you numbskull. Seriously. If you don’t actually need it, or if you only need $20 but took out $40, put some or all of the cash in an envelope and re-deposit it. Problem solved.
“But what if I need that extra money later?” you wail.
- You probably won’t. But you’ll probably want it. There’s a difference.
- You can always go back later if you truly do need extra money.
If you’re reluctant to put the money back, take a deposit envelope with you when you leave the ATM. Each time you buy something, put the receipt in the envelope and write down how much you spent on the outside. Add it up as you go. Perhaps by the sixth purchase of the day you’ll look at the envelope and think, “Dang, I’ve already spent $57 in three hours! Maybe I don’t really need this bookcase/necklace/table dance.”
Back at home, spread out the receipts and see just how that $40 or $60 got pissed frittered away. Can you live with this level of unconscious spending? Can you find other ways to meet your needs?
And can you remember this the next time you’re tempted to get walking-around money from the no-armed bandit known as the ATM?
Avoid Withdrawal Creep
Stuff does happen (ask me how I know) and sometimes you really do have to come up with an extra $25 on short notice. Here’s the problem: You’ll probably have to take out $40 because most ATMs deal strictly in twenties.
You have a couple of options:
See if there’s a way to break one of those double sawbucks on something you actually need. Not the two-buck strip of beef jerky at the gas station, but rather the free-after-rebate toothbrush at the drugstore. Re-deposit as much of that twenty as you can.
Or fold up the extra dough and put it in your shoe, to be taken out at home and added to your cash cache. If you have any class at all, you’ll be too embarrassed to take money out of your Keds at the rummage sale, street fair or strip club.
Your other option is to…
Use an ATM Alternative
If there’s something you need (not want), buy it at the drugstore or supermarket and ask for cash back. Ideally this item would be small enough to stick in a purse or coat pocket — dental floss, say, or a three-pack of condoms. (Either one can save you from a world of hurt later on. Consider them investments.)
The beauty part is that you can probably get cash back in non-$20 increments — $5 or $15 vs. $20, $35 or $50 instead of $60. (Hit the “other” key when it asks you how much you want.) Another advantage is that you won’t feel as vulnerable as you might if you were standing at an ATM after-hours.
Note: Do not use this as an end run around your entertainment budget. Stopping at Safeway for a loaf of bread and some tomato soup and then tacking on an extra $10 for movie popcorn is sneaky. It’s not dumb, though.
You want to know what is dumb? Using one of those anonymous ATMs outside a convenience store at 3 a.m. Want to be robbed without the possibility of physical danger? Using a Brand X money machine increases your chances of being cleaned out. Not only will you pay those fees, you’re more likely to be victimized by a “skimmer” device. An independent machine can be fitted with a skimmer before being set up; crooks have even been known to put up bogus ATMs for a short time, then harvest the data.
The ATM outside a bank is under video surveillance and less likely to be tampered with — but there are no guarantees. In fact, this article from The Consumerist details how crooks put a skimmer in a bank-lock door (which grabbed the data) and a camera over the bank’s ATM (to grab the PINs).
Your best bet: Not using an ATM at all. (See all previous tips.)
Banks are businesses, and businesses are all about profit. Thus you shouldn’t be surprised that they’re out to make a buck. Just don’t let it be your buck.
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There are 143 comments to "Five ways to outwit the ATM".
Cash back at the grocery store is great, except we don’t get our credit card 1% back from it and we have to be careful about remembering to enter it into the check book.
I don’t carry cash except on trips, but DH does. He generally drives to our bank once every 2-4 weeks. Sometimes with a check to deposit.
While I do make use of cash back at grocery stores occasionally, I don’t like how the purchase + cashback is all rolled up under one transaction. It looks like I spent all that money on groceries, which makes it harder to categorize how I spend my money.
most tracking programs will let you split the transaction though
Best ATM advice I got was to open an account with my credit union. Its part of the CO-OP network (http://www.co-opfs.org) and has more nationwide surcharge-free ATMs than any major bank. The closest surcharge-free ATM is only an internet search away!
same here
As an old school long time banker, I found this article very informative for the consumer.
It also reminded me of an old banker joke: How can I be overdrawn? I still have checks left!
In any event, the bottom line is use common sense.
Another option is to get a checking account, we have one with Schwabb, that refunds ATM fees. At the end of the month they refund any and all ATM fees we have been charged. Can’t save you from stupid spending with cash, but it can completely eliminate the additional cost of getting quick cash.
Yes! I also have the Schwab account and love it. Of course, it just makes it easier to use an ATM, but I’ve been doing the withdraw-what-you-need-for-whole-pay-period method, and it’s been working for me so far.
And a random side note, here in California, most Shell gas stations are giving you ten cents off per gallon when you use your Ralph’s grocery store card number. http://www.ralphs.com/in_store/fuel/Pages/default.aspx
I have the same set up for a small local bank that we use. All ATM fees get refunded at the end of the month.
etrade does the same thing except they refund it the moment it hits your account. Etrade also has a credit card with no foreign transaction fees for those of us that do a lot of foreign travel
I am so sadly ancient in my financial practices that I go inside the bank to get cash via writing a paper check.
This helps with budgeting (not that I need it much now) as I have to plan out my cash use in advance but can be a bit of a pain if I underestimate the needed amount over say, a long holiday weekend.
Still, I don’t have to monitor yet another plastic card & worry about how to use it safely and cheaply.
Not To Worry, Arandomperson,
At Age 25 I Am Noted As Being A Signature Example Of The Species “Dinosaurus Bankus” As I Do NOT Use An ATM Card EVER. Infact, I Don’t Use Any Plastic Since Becoming Financially-Savvy, As This Avoids: Any Temptation Of Over-Spending/Over-Withdrawal; Identity/Information Theft And Allows Me, Like Yourself, To Keep Better Visual Track Of My Money Using A Simple Spiral Notebook And Pen. (How Radical Is That? :p)
The Main Resource To Arm Each & Every Individual In Regards To Keeping A Safe & Sound Financial-House Is: Self-Discipline/ Self-Control.
While it’s always wise to avoid paying interest on a balance, avoiding plastic altogether effectively costs you money. With cards offering 1,2 and sometimes 5% back on transactions, you’re passing up free money by using cash all the time. My cash back cards have given me over a $1000 back a year just for buying the stuff I already buy.
I budget the weekly spending the old way using envelopes. When it was pay day I would withdraw the amount needed at my banks ATM then go inside the bank to get the $20 bills broken down into smaller amounts for distribution amongst my envelopes.
Yikes. I didn’t realize people had so much trouble with cash!
I tend to use debit or credit (for tracking purposes), so I usually don’t take out cash unless I have a specific purpose in mind — like shopping at the farmers’ market or taking a taxi. I don’t buy snacks or coffee or make small purchases, so this system works well for me.
Yeah I didn’t know this was such a big deal either. I track my spending meticulously using Mint and that only works if I use my debit or credit card. I try to keep a couple of dollars on me in case I need them but very few things I need require me to pay with cash.
@Elizabeth: That’s the way a lot of folks use cash. From what I keep hearing from financial professionals, though, not ENOUGH people use it that way.
What’s that old saw, “Mind your pennies and your dollars will mind themselves”? Maybe it should be re-tooled: “Mind your twenties and your hundreds will mind themselves.”
This is great advice for someone like myself. I never minded my pennies and as a result, spent ALL of my money on random doo-dads. I’m better now (mostly b/c I am paying off my student loans and live overseas). But this is a constant, constant struggle for me in the U.s…
I second Trisha’s advice and go one further:
I have a Schwab account which refunds all fees for using ATMs. Yes, this includes the ATM at the stadium charging $5 to everyone (even their own customers!).
My paycheck direct deposit is split into two parts: A deposit to my Schwab account that covers my cash needs and my regular savings account. At the end of the month, any extra cash in the Schwab account gets moved to savings.
This provides two things: fee free ATMs without having to search and a disincentive versus the coffee can (I actually have to GO to the ATM to get the money). I also keep my withdraws pretty small so I don’t have the cash “just laying around”.
@Jake: Good plan. I suppose a corollary to the coffee-can plan is to school oneself to be RELUCTANT to make any withdrawals. I don’t even like opening the thing, myself, but I take comfort knowing it’s there.
okay, this article made me laugh really hard. Love it. Fortunately, the ATM nearest me gives out 10s, which makes it much easier to get only what I want. I pretty much only use cash for tipping my hairdresser and going to my favorite bar (which doesn’t take credit or debt cards); in both cases, if I can’t get the exact amount I want, I just give ’em the whole bill. I figure tipping the bartender an extra $5 or whatever is not the end of the world.
Definitely addicted to my debit card for smugness purposes, though. I *love* looking at my bank account and seeing that it’s been weeks since the last time I bought something. (That’s a little sad, now that I say it out loud :P)
btw, I just finished reading Frank Abagnale’s book “The Art of the Steal,” which has a whole section on skimmers and other kinds of ATM fraud. Really interesting stuff!
@Shorty J: I indulge in a similar form of smugness when I realize that the $10 bill in my wallet has been there for a week or more, i.e., I haven’t spent a dime all week thanks to my well-stocked pantry and the ability to walk to the library for a new book or to a movie for which I have obtained a free ticket.
http://www.donnafreedman.com/2010/07/28/how-to-go-to-the-movies-for-free/
I spent six years in Europe, where money machines (banks) have, it seems, gotten it. A Request for say, 60 Euros will come with fives, tens and twenties all mixed in….I have not yet figured it out why we cannot do that here.
I’ve also been to an ATM in Morocco where the lowest denomination you could withdraw was the equivalent of something like $80. It was crazy!
You could get an account at a bank like USAA, which refunds all ATM fees up to $15 per month. That bank is awesome enough as it is, but getting back ATM fees is even better!
Amen to USAA. Combine that with the fact that you can deposit checks from your smartphone and I have no need for a physical bank.
@Emma: Good idea. All you folks with the ATM-refund accounts are thinking ahead. Again, though, make sure you really NEED to take out that cash.
Don’t you have to be in the military to get USAA?
Yes, either currently serving or retired/honorably discharged, I believe. The member’s dependents can also use USAA.
I love USAA! Its the best thing I got out of my marriage. They have THE BEST customer service– incredibly helpful and the ATM rebates are great.
I take out cash one time a week which I use for the farmers market and whatever left over is my incidental money for the week.
Otherwise I use my debit card.
Sorry, but when I see an article entitled “Five Ways to Outwit the ATM” at LEAST one of the tips should be to stop using cash for most transactions. The protection credit cards offer for loss, theft, and unauthorized purchases makes most of these tips moot. I cannot take this article seriously when the advice completely ignores what century we are living in.
Cheer up Hannah – the fact of the matter is that most people still use cash for occasional purchases and the article is perfectly valid/useful as a result 😉
If only farmers markets were all set up to take plastic…
I’m glad they’re not! The cost of having mobile access for credit and debit would likely raise prices. Besides, I think cash transactions are much faster to handle. The market I frequent is always packed, and it would be a nightmare if only one person at a time could pay at each stall and had to wait for debit or credit card transactions to process.
That being said, it’s really hard to gage how much cash to take! Sometimes a larger item like a pie is just too tempting… 😉
Yeah its true, when I stand on the checkout counter, the people before me, well, most of them, pay with cash.
We try to use cash for all local businesses so the CC fees don’t cut into their profit.
Oops.
So you’ve never been in a store buying something important when the credit/debit systems have gone down? And you never go to things like street fairs, antique markets, flea markets, yard sales etc. where there isn’t necessarily the infrastructure for credit cards?
When paying cash, there’s this thing called a ‘receipt’ which is generally perfectly good for returns, exchanges etc. And if you watch your wallet, you won’t need to worry about unauthorized purchases and theft. Furthermore, cash, unlike credit and debit, cant be used for identity theft.
@Hannah: Ha! Fooled you! I know perfectly well that we’re in the 19th century.
Seriously: There are some places that don’t take credit cards even now, in the Age of Reason. Myself, I try not to use credit in certain small businesses so they don’t have to eat the processing fee. And honestly, I do feel sheepish putting the cost of three bananas and an orange on a credit card.
To each his own. (But you’re wrong.)
Warm regards,
Donna “Grandma” Freedman
…and some of us use cash because we do not like our bank knowing what we’ve been buying and where we’ve been buying it. Perhaps that seems overly paranoid to some of you, but there is a distinct minority of Americans who still value their privacy. (For the same reason, I do not use EZPass when driving, and I do not register my SmarTrip card for the metro.)
Donna, I really enjoy your posts on GRS and I’m not calling you a grandma. I’m not saying we live in a cash free society or advocating that we start, if you re-read my original comment. This article had some useful points, but I was pointing out that you excluded one huge way to beat the ATM- use credit for *most* transactions so your visits to the ATM are minimized. It’s sort of like worrying about your car’s airbags before you even check the brakes.
@Hannah: I was calling myself a grandma. No worries.
But some people really do have a hard time with credit cards. Until they can (if they can ever) learn about how not to overspend, they might be better served with cash.
Remember, too, that not everyone can get a credit card. (Or wants one.)
I don’t think we’re a cash-free society just yet, especially if some of these other comments are any indication.
Sorry, Hannah. while I use cards for some purchases (groceries) and all online purchases, I still use cash. I shop lots of places where cash is simply easier-farmes markets, fairs, festivals, second hand markets, and small local restaurants. While I realize some folks prefer all plastic, I prefer cash for most day to day expenses.
A waitress I know points out that leaving a cash tip puts more money in the wait-staff pockets than using the cc and putting the tip on it. I hadn’t realized!
Really – why is that? Because they don’t take merchant fees out? Because they don’t have to split them? Because the restaurant can’t skim off the top?
If it’s true and is a significant amount, I’ll definitely switch to cash tips.
Is it being a Luddite or just the whole YMMV thing that causes people to use cash? For me, I try and put everything on my card but still have many instances where cash is faster or the only way to pay.
If cash works for someone else, I’m not going to call them out on it. But I do think its better to use credit 🙂
More than one mention of strip clubs in a PF article? Racy 😀
Don’t forget the table dances and three pack of condoms.
Donna,
Thanks for the article. I think your small bills “leaks” issue raises a good question: Supposedly many studies show that people spend more with credit than they do with cash. I believe that. But I also believe people have a lot of leaks with their small bills, so I’m curious how the two thoughts really play out in reality.
Cashwise, I do two things:
1) Carry very little cash, unless I’m traveling. I use mint to track all of my spending.
2) I have an account with PNC that refunds *all* of my ATM fees. Every single one, including $12 I spent at a strip club (no joke.)
As far as the bank-door skimmer mentioned in the consumerist article, they should have suggested that people open the door with one card and take cash with the other, as long as you don’t use the same pin on both cards. Me? I don’t set up pins on my credit cards, so that should help.
When ATMs first started up, banks told us that ATMs were great, because they wouldn’t have to pay as many tellers to stand around waiting for customers to come inside, so they would SAVE MONEY? They saved so much money they decided to make us pay for their savings for good measure. Love the person who goes inside to write a check – maybe we should all do this, get the bank to realize why they went to ATMs in the first place.
I remember the banks touting the money saved by not having tellers and switching to ATMs as well. I am an old-fashioned person and actually go inside the bank to cash a check if I need money.
I am a bank employee. At my office we are scrambling to figure out ways to get clients to come back IN the door, because we’ve gotten everyone accustomed to using the ATM and online banking and direct deposit…we probably only see 20% of our client base in the bank on a regular basis. Everything is automated…but guess what? Some people still want to deal face to face with their banker. Thank goodness!
We use credit cards for tracking purposes, debit cards rarely, and we treat cash like the KING it is.
Every now and then I’ll ask Hubby whether he “needs” cash. If he does, we withdraw a small amount, usually $100 and divvy that up, then we both make it last as long as possible. Often weeks.
THis is easy to do because I work from home so can make my own coffee/snacks etc., and while he’s out and about for work, he’s often in his vehicle where he keeps a Thermos pak of snacks and hot or cold drinks for the day.
I recall that those little purchases really did add up to a whole lot of dough over the week.
@Deborah: They certainly do add up. That’s probably why most people don’t remember them in the first place, let alone create a weekly/monthly total. I think the phrase “latte factory” is overused, but seriously: When I did an article for MSN Money called “Take the brown bag challenge,” I was surprised at how many people admitted (after a month of taking their lunches two or three times a week) that they’d simply never added up the cost of their noon meals out. Instead, they thought in terms of “It’s only the Dollar Menu” or “I’ll have the daily special because I’ll save a couple of bucks that way.”
Forgetting to pay attention to the Latte Factor… a.k.a. Poverty by Papercuts.
As usual, I loved Donna’s article – so full of practical advice. Where were you when we really needed you?
For years, my husband and I have only had one ATM card between us. We use it for emergencies only. If one of us is going out of town, that person takes it. Otherwise, we take out a large lump sum of cash each month that we can spend on anything, including kids’ field trips, pizza, etc. – it’s our adult allowance.
I like the idea of keeping an extra cache in the house, but I’m not sure we’ve got the willpower not to tap into it when the normal monthly cash supply runs low. As it stands now, we almost always make do until the end of the month.
As I mentioned in my blog http://wp.me/p1qfSE-1N
I recently opened capital one checking account, which reimburse $10 of ATM transaction fee every month. So if you are going by the theory of one TAM transaction from pay day to pay day, even Capital one does not have significant ATM network, you actually don’t pay for using ATM.
Idea of using ATM once a month is a very good idea. When in need for more, cash back from grocery stores, is an excellent alternative.
It is too easy to spend cash! I like the idea of taking the “extra” home to put in a stash when you don’t spend all your cash. I found that, even by tossing spare change into a ceramic bank, when the bank was full I had nearly $27. It adds up, and you never know when you’ll need a little extra.
@Tanya: Myself, I think it’s “too easy” to use a debit or credit card. How many people who go out with friends for a beer would buy bar snacks (let alone a round for everyone) if they had to take a couple of twenties out of their wallets to do so?
To me — and to more than a few others — plastic just doesn’t seem like real money.
The underlying theme here, no matter which route you choose, is: Be aware of your spending.
I always see this suggestion as a way to save money, or set it aside. I always find it doesn’t really work for me, because I track every single penny.
So if I put my change in a piggy bank, I’d have to record how much I put there. So it’s not really “surprise” savings.
I imagine if I didn’t track all my money, it’d be an excellent way to save.
This is some of the most ridiculously over-the-top hyperbole that I’ve read lately.
Oh no, not the dreaded fire-breathing ATM fee from hell!
Then again, the article did appear to be almost entirely tongue in cheek? 😀
If you take out $20 and are charged $5 in fees, that equates to a 25% cost on your transaction. And what are banks paying for savings or money market account today? 1%, give or take.
As Donna writes, if you are taking money out of an ATM machine, then take a lot to offset the cost of the fee.
@Tyler: Hyperbole? What was your first clue?!?
Oooh, ooh, I figured it out at the condoms reference! (Does that make me slow?)
I have found that the best way is not to have an ATM card. We do not use ATM so we do not pay any fees. About once a month or maybe once every two months if I have been a really good girl I take out a hundred dollars and we live on that. I use a credit card for everything else and I try not to use the credit card unless it is a need not a want.
@Terese: I know a woman whose “someday” fund (for a business she wants to start) was created specifically as a “one-way” fund. There’s no ATM card and no connection to her other accounts. Thus there’s also no temptation to tap into it when life gets sticky. To get at the money she would have to drive to the bank and fill out a withdrawal slip.
I use cash (and have not paid an ATM fee in years) quite a bit because I know that small amounts paid by credit card are hard on local merchants. I don’t really care about the nickel I get back from my $5.00 ground coffee I buy and it’s better for the store.
Not paying ATM fees is one reason to use the behemoth bank with lots of ATM machines. They’re easy to find.
Suzanne – good point – had never really thought of it like that before.
Someone’s really got the “local business” scam running on you. You’re supposed to pay them extra simply because they’re nearby, meanwhile, they get to charge you extra simply because you’re nearby.
I’ll start giving free money to people just because they’re close when they start giving me free product just because I’m close. Otherwise they’ll have to compete on merit, just like everyone else.
@Tyler: It’s a little tougher for a mom-and-pop restaurant to compete with McDonald’s.
I suppose I am giving up 10 or 12 frequent-flier miles by paying cash. Oh well. I’d prefer that Harley’s Old Thyme Cafe stay in business, and every person who saves them the 2% (or whatever it is) fee is helping them stay open.
You, of course, are free to do whatever you want.
They should raise their prices by 2% if credit cards are such a burden for them. If they’re at least 2% better than McDonald’s, people will probably still eat there.
But Tyler’s right. I look for *value* when I shop. One thing that became crystal clear to me after the recession is that mom and pop shops are no better than large corporations. Why?
Behind every large corporation is the same thing that lies behind a mom-and-pop: People. During the recession, people at large corporations lost their jobs, and people with money invested in the large corporations saw their stock value drop.
So tell me, why is mom-and-pop on the corner more deserving of my money than some large corporation? Heck, I even hold small bits of stock in many large corporations, so I’m probably doing myself a disservice if I shop at a local competitor.
I really (or try to anyway) shop based on value. If mom and pop on the corner provides the best value, then great. If Amazon.com provides the best value, then great.
I don’t know what you mean when you say they’re charging me extra. If it’s the 5 cents that I don’t get back on my Visa, that’s my choice. I don’t think that all mom and pop stores are more expensive. But it’s my prerogative to shop where I want and if I like my little coffee shop or stationary store and want them to stick around it’s my choice to make it easier on them and pay chase. You’re extra cranky today.
At the very least, they’re costing you the time it takes to go get cash instead of paying in a more convenient manner.
It would be “better for the store” if you just put a $20 in the tip jar every time you bought coffee. Why not do that?
Because a store is supposed to provide value commiserate with the price they charge you. Not having to drive to the bank to get cash before I drive to the coffee shop is added value. Being in the same town as me is pretty dubious value (especially as every place where I can buy hot coffee is pretty much, by definition, in the same town as me, since I can only buy hot coffee in person).
You can pay for it if you like. I can’t stop you. It just seems a ridiculous thing to pay extra for. Besides, if it was me, I’d much rather pay an extra couple cents than have to go to the bank. I would rather pay $3.00 for a cup of coffee with my credit card than have to drive to the bank so that I can pay $2 with cash.
But hey, I also won’t buy mediocre cars just because the people who built them live in the same country as me, but that appeals to a lot of people, too.
I don’t think anyone is advocating preferring mom and pop businesses just because they’re mom and pop. BUT, credit card fees are higher for them because the credit card transactions are a per transaction, and the amount they pay per transaction is based on how much business they do with them. So McDonalds can negotiate a .02 per transaction fee, but your local cupcake shop may need to go to .50 a transaction. AND, they are required by the credit card companies to charge the same price for card or cash, so a good shop does exactly what you suggest. They up ALL the prices so we all share the burden of JD’s next European adventure on his British Airways card. 🙂
I just hate using cash because it’s dirty. I worked at a McDs in high school, when my doc found out that I handled money every day the list of potentially life threatening illness that could be the reason behind my persistent cough went through the roof.
Not sure if it’s the same in the U.S., but it’s the small debits that are hardest because merchants are charged per transaction.
For instance, let’s say the merchant has to pay 50 cents per transaction (I’m not sure what it actually is as I haven’t worked retail in many years). On a $50 purchase, that’s not so bad (1%) On a five dollar purchase, that’s 10%. It’s much better to pay cash for latte or pack of gum.
I’m not sure if credit card companies charge per transaction in addition to charging a flat % of the purchase price. What most people don’t realize is that merchants pay the flat fee on the TOTAL amount — so they’re paying a fee on the taxes they have to collect for the government.
I went for a bike ride and spent an hour and fifteen minutes and nineteen miles contemplating the “buy local” movement, and can’t say I support it. I can say that if I misinterpreted this post as a “buy local” post rather than a “credit cards are pointless middlemen” comment, then that is my fault.
Either way, I no longer feel like arguing it.
Also, I found little baby wild turkeys. 🙂
Baby turkeys would be sweet – their parents, not so much…
Hey Tyler, you might try “Animal, Vegetable, Miracle” by Barbara Kingsolver. That really opened my eyes to the arguments of supporting local food.
We have a cash cache!! It’s saved us a lot of atm fee’s … all pocket change under a dollar goes in at the end of each day, refund change from beer bottles/cans goes in too. When it gets heavy we go to the coinstar and get bills, which go back in the jar, we just passed $100!
When we need access to quick cash we use the jar like an atm, and then pay back what we’ve “borrowed” when we’ve had a chance to get cashback somewhere, or go to the bank teller etc!
You save on ATM fees (usually less than 10%) so you can spend 9.8% on Coinstar fees instead?
+1 Lol.
One of our local regional banks has a coin counter machine in the branch nearest us, anyone (not just their customers) can use it and there is no fee.
Also, haven’t done this yet but several of our supermarkets now have “self check-out” aisles, you could always feed it lots of coins to pay for groceries!
I do use those aisles when my personal account is low on debit use (I get no monthly account fee *if* I have at least 5 debit transactions) to ring up and pay for my individual items separately – voila, 3 debit transactions for carrots, milk and a chicken.
Yes, I’ve used the free coin-counting machine at the local bank. Too bad it was a perfect opportunity for the bank manager to solicit us by pushing their crappy ‘high-interest’ savings account.
+1 Coinstar is a RIP OFF!
Not to mention they give you a little slip that then needs to be taken to the cash register to be redeemed – THAT DAY!
I love Coinstar!
I only redeem for gift cards where you get 100% of the value. It’s how I fund my ebook purchases.
At least where I live most king soopers or Safeways will give you cash back with no fees. They are also more prevalent than an ATM. Is this not the case for smaller towns? I’m not sure why people still pay fees for ATMs.
@Andrea: That was one of the suggestions in the piece…Were you referring to the Coinstar machines at those two stores?
I’m wondering about those fees myself. I have a spare-change bank of my own. Every month or so I count it and if there’s enough to wrap ($2 worth of nickels, $5 worth of dimes, 50 cents’ worth of pennies) then I do so. In my case I deposit it in the bank on my next trip, but I could also ask for bills and bring them back home if I wanted.
Also: The store itself might take your wrapped coins for change purposes. A small business might particularly appreciate a little extra change.
Hint: Once you get five or 10 one-dollar bills in your spare-change jar, trade them in for fives, tens or twenties. That might mean less temptation to break them.
I actually was referring to checking out when the little console that you sign you’re name on will ask if you want to get cash back. You can then enter your PIN and the amount you would like to withdraw just like at an ATM. Maybe a lot of places do not have this ability though. I have never used the coinstar machines so I don’t know about that.
Would a store accept rolled coins? Maybe, but they’d have to break the roll and count all of the coins to make sure someone doesn’t try to cheat them. I guess they can’t really refuse, it’s legal tender but would probably be a big hassle for you to wait for them to count it and for them to count it. Continuing to take those rolls to the bank sounds like the best use of your time.
@Jaime B: Some stores might not want to do this. But another way to use the coins is to carry a couple of dollars’ worth at all times. Pay for a $3 purchase with a single greenback and two bucks’ worth of quarters and dimes. It shouldn’t be any slower than someone using a debit card (especially if the person forgets his PIN or hesitates over how much cashback to request).
I have no logical argument against this, but I can say that when I was a cashier I HATED it when people paid in change this way. They seemed to think they were doing me some huge favor by paying their small bill in all or mostly change, but I was a tiny cog in a giant machine of a company and couldn’t have cared less if I was paid in change, bills, or a card.
And if we’re contrasting that some people take too long at the card machine by forgetting their PIN or trying to figure out the system, then let’s please also point out that there’s a lot more potential difficulties with change. Not the least of which is older people that stick their hand in their pocket, pull out a handful of change, and hold it out so the cashier has to pick out the amount themselves. I personally didn’t mind this, but I imagine it makes other cashiers pretty angry.
@ Samantha .. When I was a cashier at a gas station, I had a guy come in once and pay for his $20+ tab with loose change. He plunked it onto the counter and it went everywhere. He was grinning hugely like it was some great joke he was playing on me and tried to leave to again to go to the bathroom or browse the shelves. I said “oh no Sir, you need to stay with me while I count it so you know I don’t miss anything.” I didn’t count it slow (we had other customers), but I wasn’t hurrying either. He wasn’t too happy with me for making him stand there while I counted it, but there was no way I was going to let him hare off after dumping that on me.
I always try to out game my ATM machine, but I seem to get beat every time that I actually try to do it.
I haven’t used an ATM in years…because of the larcenous fees, risk of being robbed while visiting an ATM machine, and yes, those dreadful $20 bills that made you take out more than you intended and fritter away the excess.
I switched using a credit card for almost everything because I get reward points, and I get to keep track of everything I spend. For those rare times where a check or credit card won’t do, I just get cash directly from the teller at my bank which is right next door to where I work. Very simple.
The only time I ever overdrew my account was with an ATM card.
That was…32 years ago.
That was the last time I used one.
Do you know how difficult it is to get a credit card that does not have ATM abilities?
Cash cache? That is how we got started on our home envelope system- and never looked back!
I almost ALWAYS go somewhere that gives cash back at the register. Even if I buy a pack of gum, I’d rather spend that money + withdraw $20 than spend $2 to withdraw the same $20. I mean, at the end of it, I not only saved $1+ (assuming there’s no in-network ATMs around, and usually there aren’t because my network is TINY) but I also have gum. And gum spends very well as kiddo rewards/bribes in my household economy.
I have never used an ATM card as I’m unreasonably paranoid of having it cleaned out by some sophisticated hooligans.
I get strange looks every time I inform the bank teller that I do not, in fact, have a card.
I also prefer the cash-back benefits of my credit card.
Am I painfully backward and behind the times?
The article reminds me of a funny conversation that I had with my roommates in college once, that whenever I have cash it seems to disappear immediately. I think it’s because it’s human nature to be impulsive. Since then I’ve hardly ever carried cash.
HSBC has an online payment account which has a nice interest rate that will also allow you to withdraw up to 3x a month from any non-HSBC ATM and will reimburse you for the charges from the other bank! It’s a nice feature, though I hardly ever use it because I prefer not to carry cash and I’m better able to track my expenses when I purchase through a credit card. Plus, I get cash back on that as well (as long as you pay off the full balance each month).
I rarely use the ATM – mostly for depositing checks. Even if I take out $20 or $40, I am careful about each dollar of that money that I spend, and try to only spend the ones and fives and keep the 10s and 20s unbroken as long as possible. We have a cash cache at home too as part of an emergency fund – in case of an earthquake or other natural disaster, but it works in a pinch for other stuff like paying the cleaning woman when you don’t have time to run to the bank. I also use a very large bank with ATMs everywhere, so I haven’t paid a fee in years.
Most banks put automatic holds on checks deposited at the ATM. If you need access to your money quickly, better find another way to deposit. Just sayin’.
While I have a card, I rarely use it to get out cash. That I do with a check, for the month. The card is used for online buying and pruchasing gas, since it seems like pay at the pump or pay in advance is the law of the land, at lest in this area. Once I have taken out my monthly “allowance” if I spend some via debit card (such as the groupon to the body shop) then I hve to either put that amount back into the account at the end of the month or take out less that amount for the following month.
Its worth saying that I became a true cash person while living in Europe-so many places dont take cards that it just became a habit..
Weird no one has said this, but I have an E*trade checking account which allows you to draw money out at any ATM and whatever they charge you, E*trade automatically puts that amount of money back into your bank.
As long as you keep $5000 in the bank on avg. they will reimburse any ATM fees. Living in NYC, this is a lifesaver.
ATM fees are another bank scam. Join a credit union; then you can access pretty much any credit union ATM.
There’s also the free coin-sorter in the lobby.
I’m glad there are local businesses. I don’t have to pay any gym fees because I get plenty of exercise walking to stores that are convenient on foot — and my gasoline costs and wear&tear on my car are pretty low for the same reason.
Not to mention I always run into lots of people I know at local merchants.
I don’t think it’s a “scam” to be connected to a local economy and to care about where you live and the people you do business with. Anyway, I keep pretty close track of prices, and the local stuff is just as thrifty (and I’m *very* thrifty).
Nice life, Betsy. Curious… what’s the Walkscore of your place?
I work from home and do the same (walk everywhere I normally need to go), and yes, I think paying a little more at our small family-owned hardware store is worth the cost. When I need em for a plumbing issue, I hope they’ll still be there.
Deborah — You point out some of the many benefits of living in a walkable place!
Last time I checked, the WalkScore here was 83 I think. (scale of 100 for those who are unfamiliar — anyone can test their neighb at walkscore.com)
I live in a moderate-sized, mostly very suburban and *not* very walkable city — but I chose one of the parts of town that is much more walkable.
(It’s cheaper in rent, too!)
I love my credit union, but they charge a 3% fee to use their coin-counting machine. I’m sticking with the Coinstar-to-Amazon-credit method.
That’s a harsh way to treat a customer, my CU has a sorter in the lobby– you drop your coins, it issues a ticket, and bring it to the teller for deposit with 0% discount.
Nice to learn about the Coinstar/Amazon thing though, I had no idea.
On a recent vacation to Hawaii, we underestimated the amount of cash we needed. This is because a lot of places only took cash. Mostly family-owned restaurants and even some smaller retail stores. One store took debit cards but charges an extra $1! While we always use our own banks ATM, we had to use a local bank’s ATM.
for your next trip
http://www.hicommfcu.com/products-and-services/financial-convenience/co-op-network
My Charles Schwab checking account reimbureses any and all ATM fees chargged anywhere monthly. So, I can get cash at ANY ATM for free. Oh, and no minimum, no fees, higher interest, free checks, etc…Why would anyone use a big box bank anymore?
As far as rising ATM fees, join a credit union and NEVER worry about that again. Though I do like what you say about breaking a 20, you will most likely spend the rest. At least 50% of personal finance is psychological.
I was better off when my local favorite fast-food joint took cash only. I usually didn’t have enough cash on me to get some of their yummy but fattening food, and although there is an ATM a block away, that gave me enough of a cooling-off period so I rarely got cash to get the food. My natural laziness countered my greed for the food. I like it when two conflicting personal weaknesses fight it out.
Now that they take debit/credit cards, I have to have the personal willpower to not stop there too often. Convenience is not good for my diet.
Holy smokes! I had no idea so many people were so hostile about ATMs and debit cards. Sheesh.
@Danielle: The hostility was mostly tongue-in-cheek hostility. I feel about ATM cards the way I feel about credit cards, i.e., they’re useful tools if you can control yourself. If you can’t, you need to find ways to keep spending within boundaries. It’s when you take out $60 and can’t remember exactly what you spent it on that it becomes a problem.
I’m really sorry Donna, but I stop reading all of your articles by paragraph 2 or 3. “Put cash in your shoe”??? I frequently wonder whether I’m reading something written by a homeless person.
I guess your target audience must be…well…not me.
@Steve S: Gosh, the shoe reference was way down around paragraph 18…How’d you make it that far?
Everyone has a different style. I have to wonder, though, what homelessness has to do with it. Are you saying that “something written by a homeless person” would somehow be less valid, less worthy of your time and attention?
I thought the point of your angle was that you are NOT homeless, thanks to your extreme frugality. But money in my shoe would chafe!
Love your articles. Always a nice breath of fresh air from the skip your daily latte stuff.
Oh, burn! Donna 1, Steve 0.
*snicker*
Love your work, Donna!
@Nicole: Likewise.
… even if your favorite “cheese” is Velveeta. 😉
What if I’m wearing flip flops? I do stash cash in one of the 7 bras sometimes though…
Steve, that’s a downside of a multi-author blog that tries to address all stages of personal finance – there will be some things that just aren’t applicable to you. Just like someone in debt won’t be checking out the best ways to rebalance their portfolio. That’s what the delete button is for.
Michelle Singletary says that ATM stands for “Always Taking Money.” I get a kick out of that 🙂
We use a small regional bank and we don’t get charged any ATM fees at their machines or any other machines, plus we have free checking with no minimum balance.
We use cash, debit and credit, depending on the vendor and nature of the purchase. Each payment method is a tool, and I don’t see that it has to been an all or nothing choice.
I take $100 allowance out each week. This is a bit more than I actually need so I save up the extras. If I run out then that’s tough, wait for next week allowance. It’s been working very well so far and I haven’t taken out any $20 or $40 for a long time.
What happens with the green if we get more than 255 comments?
Check the ‘High-Yield Money Market/Savings Account’ post (the one with 1,720 comments). The colors get consistently darker until comment 369 (the last few dozen are practically unreadable), but 370 and everything after are the same shade of green you see around comment #185.
Haha. Funny CS joke, Tyler.
The varying shades didn’t work as well as I’d hoped. Now it’s going to take a couple of weeks to get that fixed! 🙂
My intention was to provide a quick visual reference as to the age of each comment. With the threaded comments, it can be tricky to know which comments are recent and which are not. With the color-coding based on age, I thought it would give folks a quick way to scan the feedback to find what’s recent and what is not. This may be one of those “good in theory, not in practice” things. 🙁
Possible future post title: How a Three-Pack of Condoms Saved me $300,000 Over 18 Years…
@Ross: You got it.
Discipline is the bottom line. Whether you withdraw at the beginning of the month twice a month, if one is not disciplined to control spending it doesn’t matter.
Great post! I`ve been a credit union member for over 20 years, and I cringe when faced with a regular bank ATM fee. Luckily, the tellers at the bank usually wave them for me…I definitely prefer the personal experience a credit union can offer me…
I hate using cash. It disappears and I can’t track it. I found I make my money stretch farther by using my debit card and subtracting it off my balance right then, and then I have a record of what I buy and where my money went. Obviously, it doesn’t work for everybody, but I like my system. I have some loose coins in my purse, but if I had to cough up a few dollar bills for a tip I wouldn’t have it!
I hate cash and never carry it. It just evaporates from my wallet! At least when I use my debit or credit cards I can track where the money went when I download my transactions to Quicken.
Years ago I figured out that the best way to hang onto cash is never to carry cash.
My then-DH and I started using ATMs as soon as they came available. Didn’t take long to realize that money runs through my fingers like water…and once it’s gone, I have no idea where it went.
For years I wrote checks for everything, because writing a check is just enough hassle that it would give me enough pause to think about whether I really wanted some doo-dad enough to bother paying for it.
Then I switched to credit cards. That also is enough extra trouble to give a tiny bit of pause. But the benefit of both checks and credit cards is a paper trail. A check register or a statement gives you a clue where you’re spending your money and helps you to think more clearly about spending.
One of the first things I did when I set my mind to fixing my finances was to stay away from any and every ATM machine. To this day, if I have cash in my wallet it disappears. Ergo, it’s best (for me) never to carry cash. Of course, emergencies are something else and in that case I would use an ATM but for everyday banking or purchasing activities? Never.
Just wanted to say I loved this post! Not just good advice but a great tone as well. Lately I’m finding I only skim most GRS posts because they’re quite dry (JD’s conversations to make a point go to the top of the list) but this was entertaining and informative 🙂
@Aussiebird: Thanks, mate. 😉
At our house I track our budget to the penny on a spreadsheet and check in with Mint.com to see how we’re doing from time to time.
My husband and I have a set weekly allowance which we have set aside in cash from the ATM. We only use the ATM card on payday.
Our son is a college student and has set up the same method for himself and he’s managed to stretch his summer earnings to support himself during the school year with limited assistance.
The rest of my finances are via credit card which I use for pretty much everything because my financial institutions pay us cash back to use the card.
Since I pay all of our bills off as they occur we incur no finance charges. This is the key and requires much discipline.
I just made a $1,000 payment on my brand new car with the accumulated rebates from my credit card!
Best way to handle change – set it aside and then take it to Vegas every 2-3 years. Only problem I had with this is that the change itself was awfully heavy to carry around to the cage at the casino. But I did not have to pay anything to have the change counted. Also, if you join a new slot club, some places give you 100% back for losses incurred during the first 24 hours up to $100/200.
This is a great article. I am going to discuss it with Hubby. I never get cash at the atm…I use plastic for everything. (Paid in full every month of course.) But Hubby likes to have cash in his pocket and I never know where his goes. Fortunately, he is happy with $20, so at least it is not too big of a drain.
I also believe that atm machines are a rip off the banks can and will charge you more and guess what yes you guessed it the banks profit not the customer
I think the most effective way is Avoid withdrawal creep or Be your own cash machine. Thank you.