You\r
probably don’t need a survey or statistic to alert you that ATM fees are higher than ever. But in case you do: Earlier this month,\r
Bankrate.com released a survey of 25 banks in large cities, which concluded that the\r
average cost of using an out-of-network ATM is now\r
$4.52, a record.\r
\r
That’s the amount of the national average ATM surcharge ($2.88) plus the average fee to\r
use another bank’s ATM ($1.64), because generally, if you use another\r
bank’s ATM, you’re hit twice. The out-of-network bank will charge you,\r
and your own bank will, too.\r
\r
And,\r
of course, $4.52 is only the national average. If you’re in New York City and\r
get money from an out-of-network ATM, on average, you’ll pay a little\r
over $5, according to Bankrate’s data. And if both banks have\r
above-average surcharges, the price to access your money becomes\r
even more expensive.\r
\r
Of\r
course, talk to bankers, and they’ll tell you there’s a reason for those\r
fees: Banks have to\r
maintain the ATMs.\r
\r
One\r
can argue that the fees are nonetheless too high, but if you’re interested in\r
exactly what goes into the maintenance of an ATM, here’s a quick breakdown from\r
John Oxford, director of corporate communication and external affairs at\r
Renasant Bank, a regional bank headquartered in Tupelo, Mississippi:\r
\r
Government compliance. Many laws dictate how banks must operate. ATMs had to be upgraded\r
in recent years to be compliant with the American with\r
Disabilities Act, Oxford says.\r
\r
Fraud protection. No surprise here, if you consider how frequently identity theft occurs. "ATMs\r
have had to add skimmer detection and other items such as higher-quality\r
cameras and lighting to make sure clients are and feel safe," Oxford\r
says.\r
\r
Maintenance\r
and service. It isn’t just that money needs to be routinely stocked into\r
the ATM, lest money run out. There’s insurance to pay on the ATM, and the bank\r
leases the property where the ATM is located, Oxford says.\r
\r
EMV\r
chip compliance. You’ve heard about how credit cards are being revamped with\r
embedded microchips that will store and better protect cardholder’s\r
information. ATMs need to be ready for that and upgraded, Oxford says.\r
\r
There is another cost as well, which\r
consumers often overlook, says John Pataky, an executive vice president at\r
EverBank, a financial services company that offers online banking: The price tag of the machines themselves. \r
\r
"Some machines are owned by the institution, but many are leased from\r
the major players in the industry, Diebold and NCR," he says.\r
\r
Still,\r
while there may be a reason for higher fees, that doesn’t mean you have to help\r
shoulder those costs. If you are tired of being hosed by ATM fees, try these strategies.\r
\r
Analyze your banking life. If you don’t like paying ATM fees,\r
make sure you use an ATM that belongs to your bank or is within its ATM network. The\r
symbols alerting you to what network you can use should be on the back of\r
your debit card, or you can inquire at your bank.\r
\r
That\r
said, even if you know what you’re doing, sometimes you need cash\r
in a hurry, and even the biggest banks can’t afford to have their ATMs on every\r
street corner. So if you continually find yourself using an out-of-network ATM and being charged a fee, ask yourself: What’s going on? When does this most often occur?\r
\r
If\r
this seems to happen frequently, you’re probably not\r
taking enough money out when you visit your bank’s ATM, and there’s your\r
problem. In other words, there’s probably a simple fix in your\r
routine to keep you from running short on cash. \r
\r
Maybe,\r
for instance, you should download your bank’s or credit union’s mobile app on\r
your phone, or visit its website and look for fee-free ATMs you\r
can use. Maybe it’ll turn out that you frequently use an ATM that’s out of\r
network when two blocks away, there’s one in your bank’s network.\r
\r
Take cash out at the grocery or drugstore. Here’s a simple\r
fix. Many retail establishments, including grocery stores, will let you take out\r
some cash, often up to $50 – and almost\r
always without a fee. Assuming you shop fairly regularly, take out a little extra as needed when you\r
shop, and you could make using the ATM a thing of the\r
past.\r
\r
Get a better bank. Maybe you need to find a financial institution that doesn’t foist a hefty fee every time you use an out-of-network bank, or\r
one that at least has more ATMs in its network. You may want to try an online\r
bank; many reimburse ATM fees, although some of those banks require you to keep\r
a hefty amount of money in your checking account to qualify.\r
\r
You could also consider switching to a\r
credit union. These operate like banks but are nonprofits that serve their\r
members rather than maximizing corporate profits (which isn’t to say that\r
members never complain about them, or that they never have high fees).\r
\r
"Nearly all credit unions\r
participate in a shared ATM network that provides surcharge-free access to\r
their members’ accounts. No single bank can boast as many ATM locations as the\r
CO-OP Network, the largest credit union-owned, surcharge-free ATM network with\r
nearly 30,000 locations nationwide," says Mike Schenk, a vice president of\r
economics and statistics with the Credit Union National Association.\r
\r
Whatever you do, try\r
to avoid paying ATM fees. If you take out $20, for instance, and you’re paying\r
a collective $5 to two different banks, you’ve just lost 25 percent of\r
that cash to two easily avoidable fees. If you aren’t paying attention to\r
your ATM fees, it may seem like only a few dollars here and there, but that’s exactly what banks are\r
banking on..
hidden fees
If the tired old cliché applies and the best things in life are free, then surely its opposite does as well and the worst things in life are fee. ATM fees. Concert ticket surcharge fees. Airport tax fees. How shall we count the feeble paths to hair-tearing aggravation?But if you're an investor, perhaps no fee rankles the spirit and wrangles the portfolio quite like the ones investment managers and financial advisors might overcharge.And while it's possible to sweep such charges under the rug as the cost of doing business, investors do so at their portfolio's peril."I see it every week, when I ask investors questions," says Scott Krase, founder and president at CrossPoint Wealth in the Chicago area. "Whether in a meeting, video conference call or on the phone, I ask questions about their current investments. I ask if they know the risk they truly hold and what do these investments cost them. The answer is the same. They don't know."Yes, but they absolutely need to know."Fees take a percentage of a client's return over time," says Ryan Goldenhar, partner advisor at AdvicePeriod and based in San Diego. "The higher the fees, the lower the benefits of compound interest for a client."Albert Einstein supposedly called compound interest the eighth wonder of the world, adding: "He who understands it, earns it; he who doesn't pays it." Safe to say that if he weren't dabbling in the relativity thing, Einstein might well have made a splendid investment guru. For as money accrues in a portfolio, you can easily reinvest it – think of dividends – and create a mountain of money where none once existed.For example, let's take $5,000 with a monthly addition of $10, compounded 10 years over a return rate of 8%. You'll end up with $12,553. Now, let's do it again: You're now up to $28,840. One more time, and in 30 years you've got a whopping $64,000. And all it cost you was 33 cents a day and some patience.If you tried the same thing but did not contribute that $120 – which a financial advisor's commissions and hidden fees could far surpass – here's what happens: You'll have just $50,313 after those same 30 years, or close to $13,700 less. (You can run similar calculations at investor.gov, a website of the U.S. Securities and Exchange Commission.)The trouble is, many people invest greater sums and hence miss out on much more money than that."Fees can be silent killers in a portfolio," says Daniel Kern, chief investment officer at TFC Financial Management in Boston.TFC is independent and "fee only," but don't be confused by the term. It means they fulfill a fiduciary responsibility to always act in their clients' best interest. They do not accept any sales-related fees or compensation, which is where charges really begin to kill an investor."Managing costs and taxes is an important aspect of selecting an advisor or mutual fund," Kern says. "A 1% annual fee on a $500,000 investment at a 6% return over 20 years compounds to more than $180,000.""Over an investors' lifetime, excessive fees can take an astonishingly huge share of the investors nest egg," says Stefan Sharkansky, creator of the Personal Fund analyzer site for advisors and individual investors. "Although some managers do beat the market before fees, it's impossible to know in advance who the lucky managers are going to be."Investors should observe two types of fees, says Carlos Dias Jr., founder of Florida-Based MVP Wealth Management Group and Excel Tax & Wealth Group."With investment advisors, a portfolio manager – the person who's doing the actual investing – might charge 0.5% more or less, while the financial advisor – the person overseeing the account and providing financial advice – might charge 1%," Dias says.When fees pass those amounts, or commissions run high, it's time to take a closer look at your arrangement. Another danger sign: lack of transparency in how an advisor constructs a portfolio, says Mason Williams, chief investment officer at Coral Gables Trust in Florida."Minimal proactive contact from your advisor is a clue," Williams says. "It's important to ask for service expectations up front and what is to be expected as a relationship begins."That's the key word: relationship. Some people need the financial equivalent of a personal trainer to get themselves in ship shape, even if other people can start and follow their own fitness regimen."If advisors are only charging for investment advice, then arguably the fees might not be worth it to an investor," says Matthew Schulte, head of financial planning at eMoney Advisor.Indeed, one way around high fees is to work with a web-based, automated investing platform commonly known as a robo advisor."Depending on an investor's personal financial situation, it might make sense for them to work only with a robo advisor," Schulte says. "If their needs are simple, pursuing a low-cost, low-touch module is certainly one possible way to achieve their financial goals. However, as their needs become more complicated, an investor can greatly benefit from working with a planning-led advisor who can provide recommendations based on their holistic financial picture."And of course not all fees are alike, and an educated investor needs to learn the difference, says Brent Weiss, co-founder of Baltimore-based Facet Wealth."Start by educating yourself on the total fees that you are paying," Weiss says. "Ask your advisor or your service provider for a summary of all fees so you know the true cost."Because in the end, knowing and dealing with the total cost now is far preferable to and cheaper than dealing with it later.