Beware the ATM Balance: Why It May Not Always Be Right

Estimated read time: 4 minutes

Here's a cautionary tale.

My friend Erin wants to eat at a food cart, but the cart only takes cash. She goes to the food cart pod's ATM. It says she has $25 in her checking account, so she withdraws $20 to pay for her food.

It turned out the ATM was wrong. Erin actually had $17 in her account. Now she has to explain to her bank why she withdrew $3 more than she actually had.

ATMs can be misleading. Just because the screen says you've got money doesn't mean that much money is actually in your account. The ATM readout is a simple, quick check of your balance. The ATM's communication is surface level, and it doesn't dive into the background of your account to check for processing transactions. It might miss that you have a check deposit on the way or a debit card payment that's about to be deducted. If you're going off ATM balances alone, you might not have an accurate idea of how much money you actually have.

Why Aren't Your Funds Available Yet?

You recently deposited a check. When you deposit a check, it takes time for the bank to verify the amount and authenticity. It's common for a bank to delay funding your account for one business day, like SunTrust does. Other banks, like Wells Fargo, try to get you at least a portion of that check before the end of the business day, if not the entire amount. While that process is underway, it might appear like the money is already in your account, but you won't actually have access to it.

You recently wrote a check. All those delays that apply to depositing a check also apply to writing a check. There's even more of a delay when writing a check because the person you give the check to has to actually deposit it. This is another reason your ATM balance might not be correct.

A recent transaction you made hasn't finished processing. Debit cards and online pay platforms are a lot quicker than paper checks, but they aren't instantaneous. Payments that include tips, like eating out at a restaurant, take an especially long time to process. Glitches and software errors could also delay a direct deposit or purchase. When a situation like that occurs, the average ATM might not be able to determine your balance accurately.

How Do You Keep Better Tabs on Your Balance?

Taking time every once in a while to go through your accounts is a simple way to improve anyone's financial life. Pull up your checking account and savings account online, and compare them to your credit card statements and bills. Check online to see if any of your recent purchases are still processing or if you have automatic bill payments scheduled for the near future. If you're regularly checking in on your finances, then you're less likely to be duped by an inaccurate ATM balance.

Try out a financial planning app

This is a tech-savvy way for smartphone users to cut down on the time it takes to compare all their finances. There are lots of financial apps available for smartphone users, but they all serve the same basic function. They compile your bills, credit cards, bank accounts and investment portfolios in one place. If you have some bills set to autopay, you can register them with your account. That way, the app can remind you about upcoming bill payments, help you move around money to cover it, and ensure that you'll never be surprised by an automatic withdrawal from your account.

Set up account alerts

Banks offer account alerts as a way of staying connected to their accounts. They're customizable, and you can set up several for a single account. Connecting a low balance alert to your phone, for instance, will send a text whenever your account balance drops below a predetermined amount. The alert may be able to track processing transactions, which would make it vastly more accurate than an ATM readout. You can also set up alerts for deposits, so you get an email or text confirmation whenever a check fully processes or when a direct deposit finally lands in your account.

Use cash

It's an old-school technique, but taking out a set amount of cash from your bank every week reduces your vulnerability to ATM confusion. It could also help you stick to a budget, so you can avoid getting into situations where you might withdraw too much money.

What Happens If You Withdraw Too Much Money?

Hopefully, the ATM denies your withdrawal. That'll let you know something is wrong. Call your bank and explain the situation. The bank representative will mostly likely have more information than the ATM does. You may not have as much money as you hoped, but at least you tracked down the issue before spending too much money.

If you do take out too much money, you may be hit with an overdraft fee. Many banks impose a fee when you withdraw too much money. The rate varies, but you can expect to pay $20 to $40 every time you take out too much cash. That's in addition to paying back the bank for the money you took out that wasn't yours.

Act quick, and you might be able to get that fee removed. Banks are usually forgiving, as long as you don't have a history of overdrafts. If you recently made an ATM withdrawal and you know your account was low at the time, keep an eye on your account to see if the withdrawal sends you into the negatives. Call the bank as quickly as possible if that happens, be honest about the situation, and politely ask for an overdraft fee waiver. Many banks want to keep their customers happy, so it can't hurt to ask!