Takeaways
- Automated Teller Machines (ATMs) are banking and credit union machines.
- ATMs let you withdraw and deposit cash in many different locations.
- ATM density is crucial when choosing the best bank or credit union to sign up for.
- Online banks offer access to other banks’ ATMs without charging fees.
- ATMs have expanded their services to support multi-function transactions like making credit card payments and other banking transactions.
Have you ever been in a pinch and needed cash quickly? Your first reaction might be to try and find a bank or credit union branch location to withdraw some money, but that is where an Automated Teller Machine, or ATM, can help you out.
Banks strategically place ATMs to give customers easy access to their checking and savings accounts, make check deposits and cash withdrawals, and manage their account balances. Here, we explore what you need to know about ATMs and how to use them to meet your financial goals.
Take the Next Step:
Member FDIC
Quontic High Yield Savings Account
Smart Money Rating: 5/5
APY: 4.50%
Required Minimum Balance: $100
What Is an ATM?
ATMs are electronic banking terminals that let you perform various financial transactions without having to interact directly with a human bank teller. They are an incredibly convenient and simple way to access a range of banking services, like withdrawing and depositing cash, depositing checks, transferring funds between accounts, and more, depending on the ATM's capabilities.
According to a recent survey, there are over 520,00 ATM terminals in the United States.[1] Banks and credit unions cleverly place ATMs for maximum convenience. ATMs are generally located in public areas with high foot traffic, like shopping centers, grocery stores, gas stations, and banks.
Many banks offer drive-up ATM access, letting you quickly access your funds without leaving your car. ATMs are an essential component of modern banking, even in the age of online banking. Account holders want and need the option to access their cash anytime and anywhere with minimal hassle.
How an ATM Works
An ATM communicates with your bank's computer system through a secure network. This system verifies your identity, account details, and available funds in real-time.
You will need a debit card to access an ATM. When you reach an ATM location, you first insert your card. The ATM automatically reads your card’s magnetic strip or chip and accesses the encrypted account information. From there, you are prompted to enter your personal identification number, or PIN, to verify your identity further and authorize transactions.
Once the card has been verified and authenticated, the ATM will display a menu of available banking functions. You can view your current checking account balances, request cash withdrawals, transfer funds between accounts, and check your available balance.
When you select a specific transaction, the ATM verifies it with the bank's computer to process the request. For example, let's assume you are pulling cash from your checking account. In that case, the ATM checks your checking account balance in real-time to ensure you have enough money for the transaction, dispenses the cash once confirmed, and updates your account balance within a few seconds.
Learn More: How Much Money Should You Keep in Your Savings Account?
Take the Next Step:
Quicken’s Website
Axos Bank® Rewards Checking
Smart Money Rating: 5/5
APY: 3.30% with No Minimum Balance
Bonus Offer: Up to $500 Bonus (Terms Apply)
When to Use an ATM
Having cash on hand in virtually any situation is a smart move. In fact, studies show that carrying around a $100 bill in your wallet helps reduce the urge to overspend.[2] Here are several situations where you might need access to an ATM.
- Need Access to Cash: The first and likely most common reason account holders use ATMs is for fast access to their cash. ATMs give you 24-hour access to your money and eliminate the need to go to a branch location during business hours.
- Check Account Balances: You can also use an ATM to check your account balances and avoid a potentially declined transaction at the register or, worse, overdraft fees.
- Have Checks to Cash: ATMs will accept check deposits, which means you can do most of your banking without going into the bank branch location. Many small businesses and start-ups rely on this function to manage cash flow. (Read more about how to start your own online business.)
- Ready to Deposit Cash: Most people feel uncomfortable walking around with a wad of cash in their pocket. Instead, you can deposit money into your checking or savings account using an ATM. The ATM will print a transaction receipt and update your account immediately.
Using an ATM can save you significant amounts of time and allow you to conveniently access your money when you want, allowing you to manage your finances on the go.
Pros of an ATM
There are several advantages to ATMs that make them super convenient banking tools for managing your personal finances. Here are a couple to consider:
- Quick Access to Cash: One of the most significant benefits is accessing your cash anytime, even outside regular banking hours or on bank holidays. Unlimited access to your ATM gives you financial flexibility.
- Many Locations: ATMs are available in countless locations, making it effortless to find one nearby, whether at home or traveling.
- User Friendly: ATM displays are user-friendly and offer account holders multiple languages to accommodate their needs, making them accessible to a broader range of potential users.
Cons of an ATM
Even though ATMs are convenient, they have some potential drawbacks you should be aware of. Here are several disadvantages to contemplate:
- Transaction Fees: There is the potential for fees, mainly when using an ATM outside your bank's network. These fees are typically charged both by the ATM and your bank, so using an out-of-network ATM can result in double fees.
- Fraud: Another risk, specifically with magnetic stripe cards, is the potential for skimming, where hackers have tampered with the terminal to steal your personal information, PIN, or debit card numbers.
- Carrying Cash: Carrying cash around can be risky for those who want to withdraw cash from an ATM. Large amounts of lost, misplaced, or forgotten money can seriously impede your budgeting process.
Read More: What is the Envelope Budgeting Method?
Other Payment Methods
In addition to ATMs, several other payment methods are available, with varying levels of convenience, security, and accessibility. Before heading to the ATM, consider these different forms of payment:
- Debit Cards are payment cards linked directly to your online checking account. They allow you to make purchases seamlessly and are an almost universally accepted form of payment. (Read about how to sign up for a debit card.)
- Credit Cards are payment cards that use a line of credit from a bank or credit union. When you make purchases with a credit card, you use consumer debt to complete the transaction. At the end of the month, you pay off your credit card bill. Credit cards are widely accepted and offer many security benefits. (Read about how to apply for a credit card.)
Take the Next Step:
On Pesto’s Website
Pesto Secured Mastercard
Smart Money Rating: 4.75/5
APR: 29.99% % (Rates Vary)
Best For: Rebuilding Credit
Required Credit Score: No Credit Score Check
- Mobile Payment Apps are also becoming incredibly popular, with options like PayPal, Google Pay, and Apple Pay letting you make purchases using your smartphone. These apps link directly to your preferred credit, debit card, or bank account. Mobile apps can be used to seamlessly tap or scan to pay for products or services, allowing you to ditch your wallet for your smartphone.
Take the Next Step:
On PayPal’s Website
The PayPal App
Smart Money Rating: 4.75/5
Cash Back: 1-5% (Terms Apply)
App: Send, Receive, Gift Cash
Best For: Sending Money Fast
- Checks are another standard payment method, although they are starting to become far less common than they were just ten to twenty years ago. Checks are excellent when you need to make a substantial payment and want a paper trail for your records, like when paying rent, buying a used car, or purchasing furniture.
Take the Next Step:
On RentReporters Website
RentReporters
Smart Money Rating: 4.75/5
Best For: Building Credit by Reporting Rent
Average Boost: +40 Points on Credit Score in 10 Days
- Wires Transfers are electronic payments made between customers at two separate banks. Account holders fill out a wire transfer form, which allows the bank to route funds quickly domestically or internationally. Wire payments usually take a couple of business days to process.
- Money Orders are prepaid payment documents that help securely transfer money between two parties. Money orders can be handy if you don't want to carry around cash or lack access to a traditional checking or savings account. You can get a money order at a bank or locations like the United States Postal Office.
Smart Summary
An automated teller machine, or ATM, lets you quickly pull cash from a machine without sitting with a bank teller. Today, many ATMs are multi-use machines that enable account holders to deposit checks, withdraw money, transfer funds, and more. ATMs are extremely convenient ways of accessing your funds at any time. When researching the best checking accounts or best savings accounts, ATM locations or ATM-sharing programs should be a primary consideration.
(1) ATMIA. ATM Population in the U.S. Shows Strong Growth Over the Past Year. Last Accessed January 7, 2025.
(2) Journal of Consumer Research. The Denomination Effect. Last Accessed January 7, 2025.
