Beware the cost of ATM withdrawals

The festive season is here with again and the spending spree is already in full gear.

To survive , prudence is required and that’s is why today I want to talk about why you should be wary as you use automated teller machines (ATM) to access your money. The little card comes with a lot of convenience but can turn out to be costly as well.

First and foremost, despite the easy accessibility of cash through the ATM, budgeting is needed to guard against avoidable charges.

If you are earning a regular income, then you should set aside a savings account that you cannot access easily using your ATM card in order to curb spontaneous and impulse withdrawals, just because cash is just a buttons away.

Huge costs

An ATM is likely to lead to reckless spending especially if your savings are piled in an account that you can access easily. Unfortunately, for some people, the ATM card never leaves their wallet or hand bag even when they are having a stroll to the nearby trading centre. Meaning, they are always ready to spend money using the card.

ATM card holders also incur huge costs if they pay for goods and services using the cards without keeping a close watch on the amount spent. ATMs have made life easier because cardholders no longer have to endure the long queues that were the norm before the innovation burst into the local scene.

The scenario turned even more exciting with the introduction of the Visa network, that allows account holders to withdraw cash at any ATM hooked to their banker’s network across the country and to make purchases using the plastic cards
Today it is even possible to deposit cash via the ATM or even do an MPESA transaction through the wonder machines. Even those outside the country can transact with the cards as long as their accounts have money and their banks are hooked to global networks like Visa.

Quick survey

But beware, the convenience of cash withdrawals using ATM comes with a price. Many banks offering ATM services charge between Sh20 and Sh40 for each withdrawal. However, when a customer withdraws cash from another bank’s ATM, the fee ranges between Sh150 and Sh250.

A quick survey reveals that Kenya Commercial Bank charges a flat rate of Sh20 for withdrawals on the its ATMs. Barclays Bank recently waived the Sh30 if a cash withdrawal is made from its ATMs but still charges Sh200 if cash is withdrawn from another bank’s ATM.

At Stanbic, customers are charged Sh250 when they withdraw from another bank’s ATM if it is on the Visa Electron network but Sh30 when the same transaction is effected through its cash machines.

At NIC Bank, if you are an account holder, withdrawing from the bank’s ATMs is free but you are charged Sh750 per month to maintain the account.

Apparently banks pay Visa for the service, which enables their networks to be compatible and the cost is then passed on to the customer.

Owning an ATM card maybe convenient but be wary of the costs involved in making withdrawals because the charges involved may drain your savings.