Airport Atms: Are They Charging You More?

Airport ATMs have a reputation for charging excessive fees and offering poor exchange rates. However, this is not always the case, as some travellers report no issues with airport withdrawals. It's important to be cautious when using airport ATMs and be aware of potential pitfalls like Dynamic Currency Conversion (DCC), where unfavourable exchange rates are offered. It's recommended to use ATMs operated by reputable banks and to be vigilant about understanding the transaction details before proceeding.

ATM fees depend on the ATM and location

In some cases, the fees depend on the company that owns the ATM. For example, some users have reported that ATMs owned by Travelex, a currency exchange company, tend to charge higher fees than those owned by banks. In addition, some banks may charge different fees depending on the location of their ATM. For instance, an in-branch ATM may have lower fees than an ATM located at an airport.

It's also important to be aware of dynamic currency conversion (DCC). This is when an ATM or merchant offers to charge you in your home currency instead of the local currency. While this may seem convenient, the exchange rate used is often less favourable than the standard interbank rate, resulting in higher fees. Therefore, it is generally recommended to decline DCC and choose to be charged in the local currency.

Furthermore, the fees can vary depending on the country and region. For example, in Asia, users have reported that airport ATMs tend to have similar fees to those in city centres, while in the UK, private ATMs located in high-traffic areas like airports may charge higher fees.

To avoid unexpected fees, it is advisable to use ATMs from reputable banks and to be cautious of ATMs located in tourist areas, as these may be more likely to charge higher fees. Additionally, it is essential to understand the fees associated with your bank account and debit/credit card, as these can also impact the overall cost of using an ATM.

Bank-owned ATMs may have better exchange rates

While it is not always the case that ATMs at airports charge more, it is generally recommended to be cautious when using them. This is because some airports have started to replace bank-owned ATMs with those owned by exchange services, which often offer poor exchange rates and charge additional fees.

Therefore, it is important to be aware of who owns and operates the ATM before using it. Bank-owned ATMs may have better exchange rates and are generally considered more reliable. These ATMs are usually controlled by networks like Visa, MasterCard, or American Express, and they do not set the exchange rate unless you choose the option of being charged in your home currency (Dynamic Currency Conversion or DCC). In this case, the ATM owner can set the exchange rate, and it is often unfavourable for the customer.

When using a bank-owned ATM, you can expect to be charged a foreign transaction fee by your bank and possibly an out-of-network fee for using an ATM outside of your bank's network. However, these fees are typically lower than the fees charged by non-bank ATMs, which can include a flat withdrawal fee on top of any fees charged by your bank.

To summarise, while bank-owned ATMs may have better exchange rates, it is always a good idea to be cautious and informed when using any ATM, especially in heavily touristed areas like airports. It is essential to read the fine print and understand the fees and exchange rates before completing any transaction.

Dynamic Currency Conversion (DCC) can result in higher fees

Dynamic Currency Conversion (DCC) is a service that allows travellers to make purchases or withdraw cash in their home currency, rather than the local currency of the country they are visiting. While this may seem like a convenient option, it often comes with a poor exchange rate and additional fees that can make transactions very expensive.

When using DCC, the exchange rate will include a markup for the merchant and/or service provider, which can be as high as 12%. There may also be other fees involved, such as foreign transaction fees charged by your credit card company. These extra costs can add up quickly, resulting in a much higher fee than if you had simply made the transaction in the local currency.

For example, let's say you are a US citizen travelling in Paris and you receive a bill for €30. The DCC may offer an exchange rate of 1 euro = 1.04886 US dollars, which seems reasonable at first glance. However, if you compare this to the current market rate that your credit card processor would charge, you will likely find that charging your card in euros is a much cheaper option.

In addition, when using DCC, you may not always be aware of the exact markup or additional fees being charged. Merchants are not always required to disclose this information, so you could end up paying much more than you expected.

To avoid these high fees, it is generally recommended to decline DCC when given the option and choose to be charged in the local currency instead. This will ensure that you get a more competitive exchange rate and avoid any unnecessary charges.

In summary, while Dynamic Currency Conversion can be a convenient option for travellers, it often comes with higher fees due to poor exchange rates and additional charges. To save money, it is usually best to avoid DCC and opt for the local currency when making transactions abroad.

Some ATMs charge flat withdrawal fees

It is important to be vigilant when using an ATM, especially in a foreign country, as some machines may be designed to look like legitimate bank ATMs, but are actually operated by currency exchange booths, such as Travelex. These ATMs can charge high fees and offer poor exchange rates.

In some cases, airports have even cut deals with retail foreign exchange companies, giving them a monopoly over ATMs in the airport. This means that travellers may be forced to use these ATMs with poor exchange rates and high fees.

Therefore, it is generally recommended to avoid using ATMs at airports, and instead to use legitimate bank ATMs in the city. It is also a good idea to research your bank's ATM locations before travelling, to ensure you can find one upon arrival.

Using a credit card may be a better option

While it is possible to use a credit card at an ATM, it is generally not recommended due to the high fees and interest rates associated with such transactions. However, using a credit card may still be a better option than using an ATM at an airport, especially if the ATM is not owned by a bank. Here are some reasons why:

Dynamic Currency Conversion (DCC)

ATMs at airports, especially those not owned by banks, may offer to charge you in your home currency instead of the local currency. This is known as Dynamic Currency Conversion (DCC). While this may seem convenient, the exchange rate offered is often much worse than the interbank rate, resulting in higher fees. Additionally, your bank may still charge a foreign transaction fee on top of the DCC. To avoid this, always choose to be charged in the local currency when given the option.

ATM Fees

Some ATMs, especially those not owned by banks, may charge a flat withdrawal fee on top of any fees charged by your bank. These fees are typically higher at ATMs located in convenient tourist areas, such as just after baggage claim and immigration. To avoid unnecessary fees, it is recommended to use an ATM owned by a bank and be cautious of ATMs run by currency exchange booths, which often have high fees and unfavourable exchange rates.

Credit Card Considerations

Using a credit card at an ATM is known as a cash advance and can be costly. Cash advances typically come with fees ranging from 3% to 5% of the amount withdrawn, or a flat fee, such as $10. Additionally, credit card companies often apply a higher interest rate to cash advances, which can be up to 29.99%. It is important to note that interest on a cash advance starts accruing immediately, with no grace period.

Using a credit card at an ATM may also negatively impact your credit score by increasing your credit utilization ratio and making lenders view you as a higher credit risk.

Alternatives to Consider

Before resorting to a cash advance, consider the following alternatives:

• Use your savings: If you have an emergency fund, using that money can be a better option as you won't pay interest or incur debt.
• Paycheck advance: Ask your employer for an advance on your paycheck or use a paycheck advance app.
• Borrowing from family: A no- or low-interest loan from family or friends can be a less expensive option.
• Personal loan: If you have decent credit, a personal loan can provide you with funds at a lower interest rate than a cash advance.

In conclusion, while using a credit card at an ATM may be costly, it may still be a better option than using certain ATMs at airports, especially if you are careful to avoid Dynamic Currency Conversion and unnecessary fees. However, it is important to consider the potential negative impact on your credit score and explore alternative options before deciding.

Frequently asked questions