Watch out for costly ATMs that charge more than flat fees

Finger using ATM keyboard

I recently saw a tweet by Peter Eavis, a reporter with the New York Times, about the ATM fee he encountered.

To use the ATM at a Holiday Inn in Florida, he was required to pay a surcharge of either $3 or 3% of the transaction, whichever was higher (and, of course, not including the fee his bank would charge him for using an out-of-network ATM).

The ATM fee for his withdrawal: $6.60.

Doing the math, that was a $220 withdrawal that cost 2 1/2 times the national average ATM fee to complete.

Felix Salmon of Reuters saw the tweet, too, and wrote that this practice is common in strip clubs. (Sorry, no firsthand experience there, though some of my Twitter followers said they've seen $10 ATM fees at strip clubs.)

I'd never heard of this percentage practice before, so I asked two experts -- Kathleen Day of the Center for Responsible Lending, a consumer advocacy group, and Will Weidman, who analyzes banking practices for Arlington, Va.-based Applied Predictive Technologies. This practice was news to them, too.

Could this spread?

Perhaps, though Weidman pointed out that few banks have actually implemented steep ATM surcharges as promised because of public backlash (a la Chase's $5 ATM fee, which never made it off the ground).

Either way, you need to really be careful and read what an ATM screen is telling you, especially independent ATMs like the ones you'll see in bars, convenience stores and bodegas because they almost always charge higher fees.

It might be worth the walk to a brick-and-mortar bank.

The adult entertainment industry is known to be an early adopter (i.e., the Internet). We're hoping it's not the case with percentage ATM surcharges.

I mentioned earlier I asked for stories of high ATM fees on Twitter, and I was told about $15 fees in Las Vegas casinos and a $10 ATM fee at Renaissance fairs.

What's the highest surcharge you've seen?

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