YOU might have been taking money out of the cash machine all wrong, and it could be costing you a fortune.
Making one of these common mistakes at the ATM could mean you’re hit with fees.
It comes as cash makes a comeback in the cost of living crisis.
The Post Office has reported that it handled a record £801million in cash withdrawals in July – some 20% more than the same month last year.
It follows a long-term downward decline in the use of cash, and people opt for contactless payments and use apps to make purchases instead of handing over notes and coins.
In fact, recent research by Money.co.uk found that the number of ATMs has dropped by 14% since 2010.
But some experts say that more people are now using cash to help them keep to a budget through the cost of living crisis.
But if you’re not used to withdrawing cash on a regular basis, it’s easy to make mistakes.
Here are some you’ll want to avoid in order to sidestep any surprise charges.
Using the wrong card
Before you take any cash out of an ATM, make sure you have the correct card to hand.
It’s usually free to withdraw money on a debit card, because this simply you accessing money that is in your bank account.
But using a credit card at an ATM could be a costly mistake.
James Andrews, personal finance expert at money.co.uk, said: “Using a credit card for cash withdrawals is a no-no.
“Every time you withdraw cash using your credit card, you’ll pay the daily interest rate on the amount from the day you take it out until the day you pay off the balance.”
On top of that, you could be charged a cash handling fee, which is typically around 2% of the amount you withdraw.
The charges and interest could add a significant amount on to the actually withdraw, so avoid busting out the credit card at the cash machine if you can help it.
Not checking for charges
If you’re on the hunt for cash, it’s easiest to make a beeline for the nearest ATM.
But before you withdraw your cash, check whether it comes with any fees.
While many ATMs are free to use, some will charge you to take out cash.
A typical fee might be £1.99 – and that’s regardless of the amount you take out. That’s equivalent to a 20% fee if you only withdraw £10.
Try to use an ATM at a bank or supermarket if you can – these are usually free (though you should still check). Those in corner shops and inside petrol stations often charge extra.
James said: “Stick to bank-owned ATMs. ‘Independent’ ATMs that you see in small convenience stores, petrol stations or newsagents are more likely to charge you fees for using their service.”
Cash machine operator Link lets you search by postcode for your nearest ATM, and will tell you whether it’s free to use or not.
Going into your overdraft
Overdrafts can be expensive, so it’s best to avoid a cash withdrawal that’s going to push you into debt if you can help it.
Many bank accounts come with an overdraft – it effectively lets you spend more money than is in your account up to a certain limit.
But you are charged interest on this amount. Rates vary but some accounts have interest as high as 39%, meaning your interest charges can soon mount up if you stay in your overdraft.
And if you don’t have an arranged overdraft (one that’s been agreed with the bank) and you withdraw more money than is in your account, then this is known as an unauthorised overdraft and you’ll be hit with a fee.
The regulator has clamped down on these fees in recent years so charges are no longer as punitive as they once were, but it’s still best to avoid them.
Withdrawing money on holiday
If you’re heading abroad, it’s best to have a specific overseas card for any spending.
You’ll incur extra charges if you use your usual credit or debit card while in another country.
And withdrawing cash at an ATM when you’re abroad could cost you dearly.
Not only do you often get a poor exchange rate if you withdraw cash, you’ll also be charged a fee – this is either a flat rate charge or a percentage of the amount you withdraw.
Graham Mott, director of strategy at LINK, which runs the UK’s cash machine network, said: “It’s important to remember ATMs abroad work differently to those in the UK.
“In Europe or the US, customers using a cash machine that doesn’t belong to their own bank will get charged for the privilege.
“Some of these ATMs will charge you for using the machine and if you’re not careful, their own exchange rate too.”
Check the details on your account to see what your bank charges for taking cash out in another country.
If the fees are high, you can either withdraw your cash before you go, or take out an overseas spending card.
MoneySavingExpert.com is a good place to compare your options – neither the Chase Mastercard and Starling Bank Mastercard charge for ATM withdrawals, for example.
Not checking the machine
You might be doing all the right things when it comes to your own finances, but you could still come unstuck if you use an ATM that’s been tampered with.
If fraudsters have compromised the ATM, it could be set up to record your details or trap your card in the machine.
James said: “To protect yourself, make sure you cover the keypad when you enter your PIN and check the machine for any signs of tampering first too.”
And be vigilant when you’re withdrawing cash, he added.
So-called “shoulder-surfers” look over you to try and see what your PIN is as you type it in – then they either steal or clone your card to use themselves.
Graham added: “Don’t use machines that look questionable and make sure the area is well-lit.
“If you do lose your card or think you may have been defrauded, contact your bank as soon as possible.”
Elsewhere, we spoke to one travel money expert about the holiday spending mistakes you need to avoid.
And one banking pro reveals how to find market-leading savings rates.
Source: The Sun