What Is An ATM, And How Do I Use It?
Da'Vonne Duncan7-Minute Read
September 16, 2021
Have you ever been in a crunch where you needed fast cash, and instead of going to a bank teller, you looked to an ATM to save the day?
ATMs have reshaped our society by changing how we can receive money from our bank accounts. It’s a convenience that, by now, many adults are accustomed to. But while most of us have used an ATM at least once, there are many moving parts to this everyday machine that you may not know about.
In this article, we’ll dive deeper into understanding how an ATM works, and how to use it safely and responsibly.
ATM: A Definition
An ATM – that’s short for “automated teller machine” – is an electronic or computerized cash dispenser. This machine permits an account holder to take money out of their bank account using a bank card. The ATM eliminates the need for a physical bank teller when making a transaction.
A Short History Of The ATM
The first automated teller machine started under the premise of accessibility when a man named John Shepherd-Barron missed the chance to visit his bank after closing hours. For that reason, he pitched the idea of a teller machine to the Barclays Bank, which later launched the ATM.
In time, many financial institutions began installing ATMs to increase profits and decrease working costs. These machines became known worldwide, eventually expanding beyond banks and popping up in other areas with high foot traffic: airports, convenience stores, gas stations, and even shopping centers.
Understanding How An ATM Works
An ATM offers you various account services in one stop; simply insert your card of choice into the machine and make your selection. ATMs accept several types of cards, including prepaid, ATM, debit or credit cards. ATMs with contactless symbols use near field communication when you tap your digital wallet or wave your contactless card by the symbol. This prevents you from having to insert your credit or debit card.
When your card enters the slot or is tapped, the ATM assesses its information by scanning its chip (or the stripe on the back of the card if you’re using an older card or machine) to determine if your card is authentic.
Once your card is verified, the ATM will prompt you to enter information such as a personal identification number (PIN), then send your data and details to its processor, which will forward your request to the bank. If the information you fill out is correct, the machine will confirm your transaction, dispensing cash in the amount of your choice from your bank account.
How To Use An ATM
An ATM offers you different self-services, such as paying your bill, withdrawing or depositing money, and even transferring funds between other accounts. Let's break down some guiding principles to remember when you’re using this handy machine.
1. Be Safe And Use A Secure ATM
ATMs have direct access to your bank account, which is why criminal activity can be prevalent around them in certain locations. Especially if you’re using an ATM in an open space with limited security, robbers may be loitering around the area. It's also not uncommon for a criminal to use a hacking device that will give them access to an account holder's information.
Choosing a well-lit site with video monitoring is essential and can help prevent identity theft. If you feel vulnerable or unsafe using an ATM, you might prefer using a physical bank with tellers under guaranteed video surveillance.
2. Insert Your Card
To begin your transaction, you must insert your bank card into the ATM. The machine will scan your card and advise you to follow the directions on the screen. Different ATMs have different card dispensers, which determine how your card is accepted. Some may require you to push your card into the slot until it stops and then prompts you to pull it back out, whereas others may hold onto your card until the transaction is complete.
3. Enter Your PIN
An ATM will require you to verify your identity by entering a PIN to get money from your account. A PIN is a four-digit numeric passcode used to access your account and prove that it is you. We recommend covering the keypad as you enter your PIN to prevent others from seeing it.
4. Select An Action
When the PIN confirms your identity, the teller machine will allow you to move forward with your transaction and prompt you to decide what you want to. Once you’ve selected your choice, you’ll determine the type of account you’re accessing (your checking account or savings account) and the amount of money you want to take out or put in.
For your convenience, most banks permit you to insert multiple bills or checks into the cash dispenser at a time – usually in a stack.
5. Verify Your Transaction
Before your transaction is complete, the ATM will prompt you to verify that you chose the correct account and that the amount you withdrew or deposited is right. You cannot proceed to the final step until pressing “OK” on the screen.
6. Complete Transaction
Once you’ve completed your transaction, the ATM will prompt you to remove your card and choose the type of receipt you want. You can take a paper receipt from the machine if it prints it out, or opt to receive one by email. It’s crucial to ensure you have all your possessions before leaving. People often leave their cards and tickets behind, leading to their accounts becoming compromised.
Is An ATM Secure?
Today, ATMs are well-protected and hard to hack into or steal money from – but the risk is still there. As previously mentioned, many thieves attempt to break into the machine by inserting a hacking tool in the card slot. This tool is called a skimmer, and it steals your card information by scanning your magnetic stripe or microchip, making fraud easier. A skimmer can be hard to identify, as it’s usually well-disguised as just another part of the ATM.
Even with a skimmer, though, hackers cannot gain access to your account without your PIN, which is why some may install hidden cameras on the ATM; this enables them to see everything you’ve entered.
How To Keep Hackers Away
Consider going to a well-monitored ATM. Many ATMs today are equipped with technology that can help banks identify potential security alerts by protecting your account from fraud. Banks and other financial institutions prevent ATM hacking in a few ways:
- Installing anti-skimmers on the ATM, blocking skimmers from reading your card information
- Encrypting your PIN and having it sent back for authorization
- Showing only the last four digits of your account number on your transaction receipt
Your account information is on your receipt, and due to that, identity theft can happen if the wrong person gets ahold of it. It's also essential to ensure that your ATM session has ended because if your account is still up on the screen, another person can access and use it; this is another common way in which identity theft can occur.
Is A Drive-Through ATM Safer?
Whether using a drive-through or walking up to the machine, it’s clear that an ATM brings you great convenience; however, your safety is imperative. If the teller machine is well-lit and is in an area with a lot of activity, chances are that’s a safer machine to use.
In general, it’s helpful to avoid standalone ATMs and remain extra careful when using drive-through ATMs, because they both are more vulnerable to thieves. If you’re accessing an ATM from your vehicle, consider keeping your engine running, lock your doors and be extra aware of your surroundings. You should be on high alert when using any ATM.
How Much Can I Take Out Of An ATM?
Banks and financial institutions set withdrawal limits on how much money an account holder can take from the ATM daily. Each limit resets every 24 hours, but the amount you can take out varies depending on the organization and other factors, such as the account type.
The bank imposes limits to ensure cash availability, which means there’s enough money to hand out to account holders. Withdrawal limitations also prevent your account from being emptied. For example, if your limit is $500 and someone steals your PIN, they can’t take out any more than that amount from your account.
Older account holders typically have a higher withdrawal limit than those with newer accounts, because they have established trust due to their banking history. A bank will usually limit you to withdrawing $300 – $5,000 daily, but every institution differs, so it's imperative to know your bank’s limit.
What Are ATM Fees?
Automated teller machine fees are charges that many banks and other financial institutions charge for using their ATMs. In many cases, banks will not require an account holder to pay a fee for using their bank, but you may get a charge to your card when you use an ATM from a bank that you don't have an account. An example of this would be if you were using a Wells Fargo ATM, but you do your banking at Bank of America. Wells Fargo will credit a small fee to your card. In 2020, the average cost of ATM bank fees was $4.64.
How To Avoid ATM Fees
Bank ATM fees can vary depending on the type of account you have, but you should consider these tips to help you avoid them:
- Pay with cash.
- Find a bank that doesn’t have ATM fees.
- Use prepaid cards.
- Choose a bank that reimburses ATM fees.
- Join a credit union that is part of the CO-OP ATM network.
Is An ATM Open All Day?
ATMs are convenient and super helpful because they give you access to your bank account around the clock when the local bank is not open. They're available for use 24 hours a day unless otherwise specified.
When is an ATM not open? An ATM may be indoors at a store that opens and closes during certain times, and because of this, an account holder can only use it during those store hours. You should look for outdoor ATMs if you need to make a transaction after hours. For instance, some grocery stores may have ATMs outside their shop, making them available for use at all hours.
The Bottom Line: ATMs Are Convenient, But You Should Stay Cautious
There’s no doubt that the ATM is an extremely useful technology. In a pinch, an ATM will authorize access to your bank account – and you don’t even have to be at the bank. You can withdraw cash and deposit money into your various accounts on your time, wherever an ATM is located. It’s crucial, though, to understand how to protect yourself when using an ATM. While most modern teller machines have advanced security features, the threat of a breach is never out of question.
On the hunt for more banking tips? Learn about bank fees and how you can avoid them.
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