Money Saver India
Saving on ATM costs

Saving on ATM costs

Some banks have decreased ATM allowances which could mean you pay more for using the ATM. Here’s how to cut down that cost.

The Reserve Bank of India (RBI) has allowed banks to recoup their losses relating to running ATMs and recover the cost from their customers who use the ATM service. But the RBI hasn’t made it mandatory, which means that banks have the option of lowering the number of times customers are allowed to use ATMs for free. Subsequently, some banks have decided to change their ATM usage policies while some haven’t.

RBI suggestion (effective from November 1, 2014)

Own bank ATMs
Your bank can charge you if you use their ATMs more than 5 times a month. Applicable for both financial and non-financial transactions, and for both metro and non-metro areas.

Other bank ATMs
Your bank can charge you if you use other banks’ ATMs more than 3 times a month in metro areas – Mumbai, Delhi, Bengaluru, Chennai, Kolkata and Hyderabad. Everywhere else in the country the free limit remains five.

Banks make changes

Some public sector banks have chosen to implement the RBI’s suggestion in part. Corporation Bank and Canara Bank allow an unlimited number of free transactions at own bank ATMs, but have chosen to restrict free transactions at other banks’ ATMs to three in metro areas and five in non-metro areas.

SBI has quite a complicated system to determine free allowance. If your savings account balance with the bank is between Rs1,000 and Rs25,000, you have five free transactions at SBI’s ATMs (for both metro and non-metro areas), and three and five free transactions respectively in metro and non-metro locations at other banks’ ATMs.

If you have between Rs25,000 and Rs1,00,000 in your bank account, you are afforded an unlimited number of free ATM transactions at own banks ATMs, but the limit on other banks’ ATMs still remains – three free for metro areas and five free for non-metro areas. However, if you have over Rs1,00,000 in your savings account, you can visit the ATM without fear – you have an unlimited number of transactions at own as well as other bank ATMs, in both metro and non-metro areas.

Meanwhile, private sectors banks will switch to the new rules starting on December 1, 2014. Axis Bank and HDFC Bank will offer five free transactions at their own bank ATMs in a month. However, the number of free transactions at other banks’ ATMs will be restricted to three for metro areas, and to five for non-metro areas.

Some remain unchanged

Some banks can afford not to implement RBI’s suggested changes because they have a certain number of customers – not too many customers to make the service unviable – or they’ve simply chosen to offer the service for free as a convenience to their customers. As LiveMint reports, Yes Bank, Kotak and Federal Bank are offering ATM services to their customers for free.

Bank charges

Canara Bank charges Rs15 and Rs5 respectively for financial and non-financial transactions (excluding taxes). On every financial transaction, SBI customers will have to pay Rs5 (plus taxes) at own bank ATMs and Rs20 (plus taxes) at other banks’ ATMs. For every non-financial transaction, the charge is Rs5 at own bank ATMs and Rs8 at other banks ATMs, beyond the free limit.

Beginning in December, Axis Bank will levy Rs20 plus tax for financial transactions and Rs9.55 (inclusive of taxes) for non-financial transactions beyond the monthly free limit. HDFC customers will have to pay Rs20 and Rs8.5 respectively for financial and non-financial transactions, not including tax.

How to save/cut down on ATM cost

Although eight free transactions a month – five at own bank ATMs and three at others – should be more than enough (if you live in a metro), there are ways you can ensure you don’t exceed the limit your bank allows you.

Withdraw more money at one go – One obvious way of reducing your costs for ATM use is to use the service less. Withdraw more money each time you use the ATM to keep you going for a few days.

Plan your ATM visits – Plan your visits to the ATM instead of hunting for one when you need the cash. If you’re passing your bank’s ATM and you know you may need money in a few days’ time, withdraw the money you need.

Make debit card payments – Make payments using your debit card. This will save you from having to withdraw from the ATM. Be careful, however, as some point-of-sales outlets add a charge for payments made through card.

Use a second ATM card – If you have more than a single savings account, using debit cards from all accounts to withdraw money should help you stay within your limit for each bank or at the very least keep charges to a minimum.

Go online – Use your bank’s net banking service for non-financial transactions such as checking your balance or generating a mini statement. Use the ATM only to withdraw money.

Missed call service – Some banks such as HDFC Bank and ICICI Bank will send you an SMS if you call a certain dedicated number. The SMS can be used to carry out certain non-financial transactions. Use this to cut down on your ATM use.

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