Is it safe to deposit checks through an ATM?

ATM bank transaction
Is she making a mistake by using that ATM to make a deposit? See more money scam pictures.
© 2009 Jupiterimages Corporation

The age of technology has proven to be a double-edged sword in most things, but perhaps most especially in personal finance. Money is always a quick swipe away in the form of a palm-sized plastic card, but then again so is debt. And, despite the convenience, efficiency and supposed security of it all, you might be among the many who've resisted the trend of trusting an Automated Teller Machine (ATM) with a hard-earned paycheck. Who can blame you? Feeding your livelihood into a computer on a street corner just doesn't feel as safe and secure as dealing with a flesh-and-blood teller standing near a bank vault.

But, the next time you find yourself waiting in a long line at the bank and you're running late for work, you might start to think that ATM on the corner looks awfully tempting.


Not only are ATMs often faster, but you can usually find them more easily than a branch of your bank and in most of the places you need them, including grocery stores, restaurants, hotels and airports. They're also available long after the bank has closed its doors, outside of normal banking hours, which is when most people are at work. You probably even have friends who deposit their checks through ATMs all the time with no complaints. And your bank is always quick to assure you that it's perfectly secure.

So, should you take the plunge?

Depositing checks through an ATM is generally safe. Mistakes do happen, but they're rare. The good news is that as the technology improves, in the words of Paul McCartney, it's getting better all the time.

We'll explain the process, what can go wrong and what to do if it does. First, to see what can go wrong, let's go over what's supposed to happen when things go right.



Possible Problems With Depositing Checks Through an ATM

To deposit checks in a traditional ATM, a customer writes his or her information, including the total amount of the deposit, on the outside of an envelope and places the check(s) inside. The machine will prompt the customer to key in the amount of the deposit. The customer can then feed the envelope into the machine, where it sits until a bank employee comes around to service it. After that, a bank employee will verify the keyed-in information and process the check as usual.

The problem with this method is two-fold. Banks have claimed it leads to fraud, as customers can key in a higher amount than they are depositing. To prevent this, many banks don't make such funds available until a human verifies the deposit. But customers have also complained of banks losing checks deposited via ATM. (Or, there's always the small possibility that the ATM itself will get robbed.) This is why experts especially advise against depositing cash through an ATM [source: Quinn]. When receiving complaints of lost cash, banks may simply tell customers it is impossible to verify the amount in the envelope. Whereas a misplaced check can likely be canceled and reissued, cash cannot.


To the relief of both banks and many customers, advanced ATMs are emerging that digitally scan individual checks to determine the amount on the spot. Although the machines vary depending on the particular bank, the customer typically can approve the digitally determined amount, ask for a check back or even print out the digital images on the receipt. These ATMs are also able to immediately send the images of the checks to the bank, thereby saving the banks money by reducing the costs of frequently servicing machines and processing checks.

But this method isn't perfect either. A common complaint is that these machines reject some checks as unreadable, requiring the customer to go to a teller, which wouldn't happen with the traditional envelope method [source: Anthony]. Many customers have also complained that depositing multiple checks with these new-fangled machines is more laborious and time-consuming than the traditional envelope method.

Even given all these possible problems, you still may feel the lure of the quick-and-easy ATM deposit. After all, banks don't usually lose checks, and yours might offer the more advanced machines that seem to be less prone to such mistakes. Or, your work schedule might prevent you from even having the option to go to a bank during the day. The good news is that, if you still insist on depositing checks through an ATM, there are a few tips to follow that can at least minimize the potential of a problem.


Tips for Depositing Through an ATM

So you're making a deposit at the ATM. To minimize your risk of a potential problem with the transaction, follow these tips:

  • When using the envelope method, record the transaction in your checkbook. If you are using an advanced ATM equipped with scanning features, take advantage of the opportunity to examine and verify the scanned amounts. As with all important transactions, keep the receipt of your ATM deposit. If you use an advanced ATM, print out the images of the checks on the receipt as well.
  • No matter what kind of ATM you use, financial planners always advise that you examine your bank statement, or better yet, frequently check your online statement. Examine the statement to verify all the transactions for accuracy. As soon as you spot a mistake, contact your bank. The receipt will be the documentation you need to back up your claim if you ever find a mistake on a statement. And if you provide a receipt to the bank to prove your claims, photocopy the receipt for your own records.

Of course, there are alternatives that we haven't yet discussed. Probably the most important of these is you should talk to your employer about the possibility of direct deposit. This will ensure that your regular paycheck automatically gets deposited into your bank account. You'll receive the paycheck stub for your records and you'll save yourself the hassle of having to visit the bank or the ATM to make a deposit.


And, as convenient as ATMs are, an even easier technology might soon become prevalent. The bank USAA now allows customers to deposit checks via iPhone. With their application, it's as easy as taking a picture of both sides of the check and sending it to the bank [source: Stellin].

But, of course, this service is only available to qualifying USAA bank customers who have ready access to an iPhone. Until such services become more common, you'll have to ask yourself whether the convenience of ATM deposits is worth the risk.


Lots More Information

Related HowStuffWorks Articles

  • Abagnale, Frank W. "The art of the steal: how to protect yourself and your business from fraud - America's #1 crime." Random House, Inc., 2002. (Jan. 14, 2010)
  • Bank of America. "Getting Started: Demos." Bank of America. (Jan. 14, 2010).
  • "Making a deposit at an ATM." April 1, 2005. (Jan. 14, 2010)
  • Bruce, Laura. "10 consumer tips for ATM safety and security." Dec. 17, 2003.
  • Fontinelle, Amy. "Banking: Debit Cards and ATMs." Investopedia. (Jan. 14, 2010)
  • Kovacich, Gerald L. "Fighting Fraud: How to Establish and Manage an Anti-Fraud Program." Butterworth-Heinemann, 2007. (Jan. 14, 2010)
  • Lehrman, Paul. "New ATMs better only for banks." (Letter to the editor) July 5, 2009. (Jan. 14, 2010)
  • Liberman, Gail and Alan Lavine. "Hold the envelope: Envelope-free ATMs gain popularity, but also pose potential drawbacks." Market Watch. Oct. 2, 2006. (Jan. 14, 2010)
  • Mandle, Nick K. "Three tips to avoid ATM skimmers." Consumer Reports. April 28, 2009. (Jan. 14, 2010)
  • Quinn, Jane Bryant. "Making the most of your money." Simon and Schuster, 1997. (Jan. 14, 2010).
  • Schultz, Jennifer Saranow. "A User's Guide to Check Deposits at A.T.M.'s." New York Times. Dec. 9, 2009. (Jan. 14, 2010)
  • Stellin, Susan. "Bank Will Allow Customer to Deposit Checks by iPhone." New York Times. Aug. 9, 2009. (Jan. 14, 2010).