If you are a bank account holder, please take note that effective May 1, the expenses for withdrawing cash from an ATM, checking balances, or requesting mini statements will be revised upwards. The Reserve Bank of India, after approving an increase in the ATM interchange charges, takes away the comfort zones of customers, meaning higher charges are to be expected after the limits of free transactions are reached.
Why Are ATM Charges Increasing?
NPCI initiated this revision based on persistent appeals made by white-label ATM operators somewhat contending that some works have seen a rise in cost, thus justifying an adjustment in fees. Subsequently, banks will also predictably charge more to those customers who make frequent ATM withdrawals or balance inquiry transactions that are in excess of the permitted free transactions.
New breakdown of ATM charges.
Here is the break-up of the new charges with effect from May 1:
- Cash Withdrawal: Increased from ₹17 to ₹19 per transaction
- Balance Other Inquiry: Increased from ₹6 to ₹7 per transaction
These charges are only applicable once the free monthly ATM transactions permitted are run out. Most banks allow 3 to 5 ATM withdrawals free of charge per month, depending on whether you are withdrawing from your own bank’s ATM or another bank’s ATM.
Who Will Be Most Affected?
Customers of small banks are likely to feel the maximum pinch. Most small banks rely on larger banks for ATM infrastructure and thus are more susceptible to increased interchange fees. Other banks with active users working with quite a lot of withdrawals and balance checking can expect this change to convert into some serious banking costs over time.
What Interchange Fees Are?
An interchange fee is what one bank pays to another when a customer accesses an ATM somewhere else. For instance:
- If you use an HDFC ATM card at an ICICI ATM, HDFC pays an interchange fee to ICICI.
- This cost is in the end passed to us, the bank users.
The fee ensures interbank transactions to lubricate; henceforth, provided you have passed free limits, it becomes the extra burden for you.
Ways To Avoid Extra Charges
Tips on how to save money:
- Use your own bank’s ATMs as far as possible; many banks have unlimited free transactions at their machines.
- Be aware of how many free transactions you have left and avoid unnecessary ATM trips.
- Cut down your cash withdrawals by using digital payments or UPI transfers.