How to avoid being stung by ATM fees

Australians are forking out a whopping $51 million per month in ATM fees, a new report has revealed.

The document released by The Reserve Bank of Australia, revealed that 25.56 million Australians made a withdrawal from an ATM outside of their financial institutions in May, totaling an estimated $51 million in fees, according to RateCity.com.

"Many consumers are essentially giving their hard-earned money away to banks when they withdraw cash from an ATM that isn't their own institution's machine," said the websites CEO.

"We calculated that in the 12 months to May 2010, Australians have paid banks approximately $655 million in ATM fees and every cent of this could have been easily avoided with better management of your finances."

The report also revealed that whilst Australians are paying big when it comes to ATM fees, many consumers have opted to use ATMs provided by their financial institution.

The RBA reports a 2.36 percent increase or 988,000 more withdrawals have been made from ATMS within consumers own networks, thanks to the Federal Governments ATM reform in 2009 (for more information on the reform, including what you're being charged, click here) which calls for banks to disclose exactly how much a customers will be charged per ATM transaction.

According to leading financial comparison website www.moneyhound.com.au there are seven simple steps consumers can take to avoid being stung by bank fees.

1. Reconcile your bank account

Regularly check your account balance to ensure there are sufficient funds available to cover any transactions or purchases but be weary of free transaction limits that may be imposed on your account. Internet and telephone banking is a good way to monitor usage as it is significantly cheaper and far more convenient as you have 24/7 access.

2. Know your payments schedule

Check when periodical payments or direct debits are due and reschedule them if necessary. If there are insufficient funds in your account when a periodical payment or direct debit is scheduled, you are likely to be charged a late payment fee or debit dishonour fee from the biller.

3. Choose the right bank

Choose a bank account that does not charge exception fees at all. Make sure you read up on the terms and conditions of each account, as they can vary significantly. Students, concession card holders or low income earners may be eligible for lower fees accounts.

4. Increase your credit limit

Some banks will switch off the ability to exceed your credit card limit on electronically authorised purchases and cash transactions. It might be worthwhile increasing your credit limit if your spending habits have changed, but make sure that the credit card you use is the most suitable for your spending patterns. Paying for unnecessary features such as complimentary insurance, purchase protection and rewards programs may end up costing you more in the long run.

5. Avoid late payment fees

To avoid late payment fees you should ensure that you pay at least your minimum monthly payment by the due date. It is recommended that you don't just pay the minimum payment required, as you'll be charged interest dating back to the purchase of each individual item, thus forfeiting the interest free period on the past purchases. Until the balance is paid off in full, current and future purchases will not be covered by interest free period.

6. Find a safety net

Banks may offer the following services - SMS alerts for both successful and missed transactions or a 'sweeps' facility to automatically transfer funds from another account when a direct debit is presented which may overdraw an account. Some transaction accounts may have a 'safety net' facility which provides an overdraft limit also. These features are likely to incur a cost but may just provide added comfort or peace of mind.

7. Make an informed decision

Most importantly, shop around. Leading finance comparison sites such as www.moneyhound.com.au can help consumers make better informed decisions around finding financial products that are better tailored to their needs.