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The poorest are paying the price at ATMs

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Cash machine
Profile photo of Harry Cheesman Harry Cheesman Which? Money
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Fee-paying cash machines are a convenience for some, but can form part of a deeply unsatisfactory mixture of financial service provision on our high streets. Should we have to pay for the convenience?

When I’m out and I need some cash quickly, there’s nothing more reassuring than to hear the whirr of a cash machine doling out the dough. Reassuring, that is, until you get hit with the annoying pop-up message that ‘this machine will charge you £1.50 for this withdrawal’.

Charging for cash convenience

Then again, for the convenience that the machine provides, it’s not that awful to have to pay a little charge here and there, right? Perhaps. But these charges are no joke for the 300,000 of Britain’s poorest people now living more than 1km from the nearest free cashpoint.

For many of them, their local cash machine is a vital source of access to benefits or pensions and, if it charges, they’re the ones most likely to find it difficult to travel long distances to a free ATM due to mobility or transport problems.

High-cost credit on our high streets

The situation is slowly improving: the number of fee-paying ATMs decreased in 2013 by 135 to 20,260, while the number of free-to-use ATMs grew by 838 to a record 46,472 – around 70% of the network. Still, it’s a sign of today’s economy that certain – often poorer – parts of Britain are over-served by the same types of financial services, such as payday lenders and fee-paying cash machines. For those that rely on the local high street, this hardly represents top-drawer financial provision – but where else are they supposed to go?

Using fee-paying cash machines may not be as dangerous as payday loans. But, in combination with high-cost credit on our high streets, they are fast-becoming the indicator of poverty in the UK.

Comments
19
Sophie Gilbert says:
1 February 2014

In a lot of instances, ATMs really replace fully paid members of staff, don’t they, when they are placed just outside a bank. Why should we have to pay for the convenience indeed? Isn’t it because banks are there to make a profit first and foremost, and providing a service to the community comes second?

Maybe it’s because RBS still is in trouble, or it’s another likely cynical cost-cutting exercise, but I have seen my local branch being closed and been told, don’t worry, you can go to the next town where your account has now been moved and you’ll get a great service there. Aye, if I pay to take the bus, an extra cost. (I have no gripes about the service I receive in RBS branches once I’m there, which is top notch 99% of the time.) But at least I can use RBS ATMs free of charge.

Meanwhile, the rich are getting richer…

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wavechange says:
1 February 2014

I live in an area well served by free cash dispensers and they are working most of the time. I am well aware that many are not nearly so lucky. I have avoided paying to use a cash dispenser by using a debit card at supermarkets, most of which seem to offer up to £50 in cash when paying the bill.

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NFH says:
1 February 2014

It’s a lot better here than in the United States where it is common for both the card issuer and the ATM owner to levy separate fees. At least for GBP withdrawals within the UK we only have the latter and then only in 30% of cases.

If people voted with their feet and acted on principle rather than on laziness or lack of planning, the chargeable ATMs would go out of business.

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Argonaut... says:
1 February 2014

You can get cash w/out a transactional charge to the extent that
a debit card is accepted, that is just abt every high street
retailer.

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Grandad says:
1 February 2014

There is always cash-back if you plan it properly. Wilkinsons and Poundland also have atm’s inside their stores which are free! The Post Office will give free cash withdrawals. I normally get by with only £10 per week in cash and that’s just for the Church coffee morning and giving the Grandchildren some refreshment money when I take them to Cadets!

I always make a point of displaying disgust in a shop where there is a charge on the ATM and then walk out!

When abroad, I use a pre-paid currency card which has free atm withdrawals. Just make sure that the ATM doesn’t charge or, if splitting a bill with someone else and they’re paying cash, pay the entire bill by card and grab the cash!

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NFH says:
2 February 2014

“if splitting a bill with someone else and they’re paying cash, pay the entire bill by card and grab the cash” – excellent advice. You can also benefit from doing this in the UK. It means you get points, cashback or airmiles etc on your credit card for others’ expenditure. You also effectively make an interest-free and fee-free cash withdrawal on your credit card.

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Rwth of the Cornovii says:
2 February 2014

I have always been very disgusted by fee charging ATMs and refuse to use them. Occasionally, at the beginning, I got caught out by the LINK machines. For many years I have managed without cash in many situations, and only carry small amounts at any one time. If possible I pay with a credit or debit card.

Some people just don’t have the opportunity to do without cash for transactions. I feel very sorry for their predicament.

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malcolm r says:
2 February 2014

I wonder how many other people – poor or not – live more than 1km from their nearest free cash machine. An awful lot more than 300 000 I should imagine. Any statistics? I have seen a claim that 97% of cash withdrawls are free anyway. I confess to never having used one; when I go shopping I have a nearby Nationwide from whom I extract cash.

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wavechange says:
3 February 2014

Many people withdraw smaller amounts of money from ATMs as a way of budgeting. For example, it is common for young people to decide how much they are going to spend on a night out and withdraw this amount of money. Perhaps it would be fairer for the fee to be a percentage of the transaction rather than a fixed amount.

Someone has to pay for installation and maintenance of the ATMs that charge a fee. They are generally small, so will require more frequent topping-up if users are withdrawing large sums.

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Iamnotcurlywatts says:
3 February 2014

I’m not a fan of paid for cash machines but there is a cost involved in using any cash machine.

If you use a machine which doesn’t charge you an up front fee this is because the bank has already charged you using overdraft charges, the cost of a premium bank accounts or just by not paying you interest on any cash held in a current account or low paying savings account.

The machines with up front charges tend to be provided by companies which are not High St Banks and so have to make an explicit charge to users.

As pointed out, this does affect poorer people disproportionately, as they do tend to live further from free-to-use machines. Also, if you withdraw small amounts the fee as a proportion of the transaction is higher.

I’m not sure alternative there is, however. The banks don’t offer these services in areas they think there is no commercial value. Would anyone want to pay higher bank charges so they can offer a more socially just approach to banking?

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Upsidedown says:
3 February 2014

There is a better argument for a charge to use a bank branch than there is for a cash-point. The proportion of the costs of the building and staffing just to give one access to one’s own money is far more than the servicing of a machine.

For those of us in rural and even large urban estate areas there is no normal facility for obtaining cash so cash-points are the only means of small amounts for newspapers, bus fares etc. which cannot be obtained elsewhere (I don’t want to spend unnecessarily just to get cash-back).

The provision of cash-points should be a free service at least partly sponsored by the banks and by the local chambers of commerce.

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peterdominic says:
3 February 2014

stop the banks from taking are money

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malcolm r says:
3 February 2014

If you regard the provision of cash machines as a social service, then any subsidy (because they cost money to install and maintain) were justified it should come from local or national public funds, not from the private sector.

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wavechange says:
3 February 2014

I agree if the ATMs are installed in a public place, but they are often installed in shops and pubs – presumably to help customers spend more money.

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Brian Andrews says:
7 February 2014

The fact that most banks have chosen to save costs by closing all but their busiest branches, is not a reason for the long-suffering taxpayer to subsidise them further.

The holding and servicing of a bank account is a commercial contract, and any ensuing costs should be covered within that contract, not subsidised by other people. Why do some people believe that taxpayers should support all their private activities?

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Grandad says:
3 February 2014

The cost of ATMs is more than covered by the savings brought about by branch closures and staff losses. Our local shopping centre used to boast an autonomous branch of Barclays. The building is now an Estate Agents and two ATMs have been installed in a supermarket wall. I have never been into a branch of my bank. They did have a branch in the town centre but that closed down many years ago so I use cash-back, the Post Office and occasionally, an ATM. All other transaction are either dealt with online, mobile or via telephone!

In France they seem to be free, at least the ones I’ve used are and using a pre-paid currency card, I manage to get at my money without charges!

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Richie says:
3 February 2014

All banning charging would do is make the convenience machines disappear overnight anyway. Why would the banks pay for security firms to service machines in remote locations with no recompense when they could just remove them and make customers travel into town to a free one anyway?

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Colum says:
3 February 2014

Maybe we should focus on moving away from Cash and minimize need to use Cash Machines.

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Grandad says:
4 February 2014

I use a card whenever possible and I’m not afraid to use it for small amounts. Unfortunately, there are still one or two occasions where only cash will suffice. A nice thought through.

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