What Is an Automated Teller Machine (ATM)?

What Is an Automated Teller Machine (ATM)?

Let me explain what an ATM really is. It's an electronic banking device that lets you handle basic financial transactions on your own, like withdrawing cash or depositing checks, without needing help from a bank teller or branch staff.

If you have a credit or debit card, you can access cash from most ATMs, whether you're in the U.S. or abroad. These machines make things convenient by enabling quick self-service options such as deposits, withdrawals, bill payments, and account transfers.

You'll often face fees for withdrawals, charged by your bank, the ATM operator, or both. To skip these, stick to ATMs run by your own bank network. And remember, using one overseas usually costs more due to exchange rates and extra fees.

History of ATMs

The first ATM showed up at a Barclays Bank branch in London in 1967, though there are mentions of a cash dispenser in Japan around the mid-1960s. By the 1970s, networks connected banks so you could use one bank's card at another's ATM.

Soon after, ATMs spread globally and are now in every major country, even small island nations like Kiribati and the Federated States of Micronesia. You might hear them called automated bank machines, cashpoints, or cash machines.

Today, more than 4 million ATMs are in use around the world.

Types of ATMs

There are two primary types of ATMs. The basic ones let you withdraw cash and check your account balance.

More advanced machines accept deposits, handle line of credit payments, transfers, and account info access. To use these features, you usually need to be a customer of the bank operating the machine.

Here's a tip: You can now buy or sell Bitcoin and other cryptocurrencies at Bitcoin ATMs. These are internet-connected terminals that dispense cash for crypto or let you purchase crypto with cash or card. There are over 28,000 of them worldwide.

ATM Design Elements

Each ATM design varies, but they all share core components. The card reader scans the chip on your card's front or the magnetic stripe on the back.

You use the keypad to enter your PIN, select the transaction type, and input amounts. Cash comes out through a dispenser slot connected to a safe inside the machine.

If you need one, the printer provides receipts showing the transaction details, amount, and balance. The screen guides you with prompts and displays account info.

Full-service ATMs include slots for depositing checks or cash.

How To Use an ATM

To use an ATM, insert your bank card and follow the on-screen prompts to withdraw cash from the slot. You'll need a debit or credit card, and you'll authenticate with a PIN before any transaction.

Many cards have chips that send data to the machine, similar to scanning a barcode. Banks place ATMs inside and outside branches, as well as in busy spots like shopping centers, stores, airports, stations, gas stations, casinos, and restaurants.

Most bank ATMs are multifunctional, but those off-site are typically just for cash withdrawals.

ATM Fees

You can usually use your bank's ATMs for free, but another bank's machine will charge a fee. In 2022, the average fee for an out-of-network withdrawal was $4.55, according to MoneyRates.com. Some banks refund these if no in-network ATM is nearby.

These fees add up if you withdraw often. For instance, a $4 weekly fee from a non-bank ATM means over $200 a year.

Using ATMs Outside the U.S.

ATMs make it simple to access your accounts from nearly anywhere when traveling. Experts suggest using foreign ATMs for cash abroad because they offer better exchange rates than most exchange offices.

That said, your bank might charge a transaction fee or a percentage of the amount. Many ATMs don't show the exchange rate on receipts, so tracking expenses can be tricky.

How Much Can You Withdraw from an ATM?

Withdrawal limits per day, week, or month depend on your bank and account. Some cap it at $300 daily, but Citibank often allows up to $1,500 based on your status. Call your bank for exceptions or upgrade by depositing more.

How Do You Make a Deposit at an ATM?

As a bank customer, you can deposit cash or checks at their ATMs. Insert them directly, or use a deposit slip and envelope if required. Endorse checks with 'For Deposit Only' on the back for security.

Which Bank Installed the First ATM in the U.S.?

Chemical Bank installed the first U.S. ATM in Rockville Center, New York, in 1969, two years after the U.K.'s first. By 1971, over 1,000 were worldwide.

The Bottom Line

An ATM lets you get cash from your account without seeing a teller. Some are basic dispensers, others handle deposits, transfers, and payments. Always check fees before withdrawing to avoid extra costs.