Using ATM machines is without a doubt one of the most flexible and convenient methods that you can use to access quick cash from most any location. They’re available worldwide in high traffic areas, banks, restaurants, sports venues, airports, gas stations, and stores and even at events like traveling carnivals and libraries. You wouldn’t be hard-pressed to find an ATM machine most anywhere if you were to look around. But even with that kind of availability and flexibility, ATM cash machines are not always the best choice for some people. As a matter of fact, they can sometimes be the worst things for them.

ATM Debit vs. Credit

ATM machines can take both debit and credit cards to perform a transaction. The debit card allows the person to access their bank account and get money that’s directly available in their accounts. Although there are sometimes daily limit withdrawals for most transactions, it is still possible to withdraw a substantial amount that’s needed for most people. Also, if the person has a feature on their account called “Overdraft Protection,” they can still gain cash access if they don’t have sufficient funds immediately available in their bank accounts. Just as it is with credit cards and interest rates, there are interest rates or fees attached to this overdraft protection feature if the balance is not satisfied within a certain length of time.

Credit card transactions performed at ATM machines will access the person’s account, but will do so by using their credit card accounts. This means that they can and will gain access to the cash, but that access is also going to mean that they’re going to have a bill because that transaction is essentially acting as a “loan” to the person who withdraws the money. Along with this loan transaction comes an interest fee that is going to be attached to the withdrawal when the statement is released at the end of the billing cycle.

What’s the Problem?

Educating oneself on the processes of cash transactions and the different methods of withdrawing cash is the only way to avoid having financial issues. Some people who choose to make these types of “alternative” transactions aren’t fully aware of how the process works and may find themselves completely overwhelmed with debt in a short amount of time.

For instance, an overdraft protection fee for a customer may be set at an advance of an automatic $50.00 for each transaction instance, even if the person only withdraws $20.00 from the ATM machine. The other $30.00 may be deposited into their bank account, and the customer will see his balance slightly increase. This may be a great thing until the customer gets his statement and realizes the substantial amount of money that he’s been charged for making that transaction. The charge for interest rates or fees calculated on the $50.00 instead of $20.00 can be quite significant. Compile that with the possibility of customers withdrawing hundreds of dollars at a time with this method, and the idea of mounting fees and rates can be staggering.

For this reason, it’s best to know and fully understand each ATM and financial institution policies regarding cash advances and withdrawals. Financial maturity in handling money matters is also very important in realizing that everything is not “free,” especially when it comes to making transactions that will require you to treat them as types of loans.

It’s important for customers to read the fine print and any printed or digital material that comes with each banking transaction. They can also check with the financial institution where they’re making the transaction to inquire about its withdrawal policies. Customers should also take care to carefully read the digital readout that appears on ATM machines just before withdrawal or overdraft transactions are made. Being fully informed and aware of details before making withdrawal choices can save customers a lot of time and money down the road.