Navigating the financial landscape can be tricky, especially when seemingly simple actions—like withdrawing cash from an ATM—come with hidden risks. Many people assume that all ATMs function the same, but that’s far from the truth. In reality, some could be draining your wallet with excessive fees, exposing you to security threats, or subtly impacting your future financial transactions.
Now, experts are sounding the alarm about a particular type of cash machine that may be more of a financial trap than a convenience. Here’s what you need to watch out for.
Imagine this scenario: you’re in the CBD, in need of cash, and the nearest ATM happens to be at a TAB (Totalisator Agency Board) or similar gambling establishment. You might not think twice about it, but lenders will.
Gus Gilkeson, CEO of Grow Capital, shared a cautionary tale about a friend who faced significant hurdles when applying for a loan due to frequent withdrawals from an ATM at a gambling venue. Despite the money not being used for gambling, the association alone was enough to set off alarms for the lender.
‘It happened to a friend of mine who was working at a specific area in the CBD, and the closest ATM was actually at a TAB, and when we went to get a loan, it was a really bad red flag. We had to work really hard to get around it,’ he told Yahoo Finance.
This kind of financial footprint can lead to a host of complications. Lenders may perceive you as a higher risk, potentially leading to outright rejection of your loan application or the imposition of stricter terms, such as higher interest rates. At the very least, it will likely delay the loan process as you scramble to provide additional documentation and explanations.
Gilkeson’s advice is clear: be mindful of where you’re withdrawing your money in the lead-up to applying for credit. Lenders scrutinise transactions closely, and it’s essential to avoid giving the impression of risky financial behaviour.
In the case of Gilkeson’s friend, they had to go to great lengths to demonstrate their creditworthiness.
‘We had to get quite a lot more historical statements to show that there were no other specific gambling issues. We got a statutory declaration saying that they didn’t hold any gambling accounts with any of the agencies,’ he said.
‘We actually offered, in this case, for the assessor to interview the client themselves. So, there’s a bit work of undoing the assumption of gambling.’
Another client of Gilkeson’s encountered difficulties with loan approval because they withdrew a large sum of cash just before the Melbourne Cup, a prime gambling event. Although the withdrawal was unrelated, the timing was enough to raise concerns with the lender.
But it’s not just ATM withdrawals at gambling venues that can hinder your loan application. Gilkeson points out other factors that could alarm lenders:
- Frequent use of food takeaway services: While the occasional takeaway won’t hurt, regular orders could suggest poor cash flow management for lenders.
- Missed payments: A few missed payments within a six-month period can have a lasting negative impact on your creditworthiness.
- Large deposits: Even if it’s legitimate, large deposits can reportedly trigger anti-money laundering checks, requiring you to explain the source of the funds.
- Cryptocurrency transactions: The untraceable nature of digital currencies can make lenders wary, as trading in crypto is often viewed as high-risk.
The bottom line is that while an automatic loan approval could happen swiftly, any of these issues could lead to a manual assessment, significantly delaying the process.
As we navigate our financial journeys, it’s essential to stay informed and make choices that align with our goals. For our readers at YourLifeChoices, we recommend reviewing your banking habits and considering how they might be perceived by potential lenders.
If you’re planning to apply for credit, it’s worth taking the time to ensure your financial history reflects your true intentions and capabilities.
Have you experienced any unexpected hurdles when applying for a loan? Share your stories with us in the comments below, and let’s help each other stay on top of our financial game!
Also read: Unexpected ATM fees: What you need to know about charges and banking practices
Do they also take into account your location, a town where the Banks have closed. the Post Office has closed and the only establishment to have an ATM is the Local Pub, which does have Pokies.
If I want to withdraw cash, it has to be at the Pub, using the ATM that charges $4.80 per transaction.
The next nearest town with a Bank/Post Office/ATM is just over 40km away.
Therefore how would I be treated if applying for a loan with the Bank that closed it’s local outlet.
Thank goodness that I don’t have any of these worries.
We have all 4 big banks in town, and I can also withdraw my funds at any ATMx machine in town, too (3 of them that I know of), meaning that I don’t pay any ATM fees at all.
I withdraw the same amount each fortnight for my food & general spending so that I can keep an eye on everything that I purchase in these categories. Then there’s only a 2-3 page bank statement to reconcile each month, compared to a possible 8-10 pages if I was to use card for every purchase. I won’t ever use cards for any purchases, especially if there’s a ‘fee’ to use the cards.
I also use an Excel spreadsheet to do my budget and MYOB to record all my spending. I’m a retired bookkeeper, so I know how to use them.