The device was found by a man carrying out repairs on the cash machine at a service station on the Buncrana Road this morning.
A cash trap is a device which is fitted to the slot where money comes out of the machine. It prevents the cash from being dispensed but also prevents it from being pulled back in by the cash machine.
Police have said the device has been removed and enquiries are now underway to establish how long it may have been there and identify those responsible for placing it.
“I would ask anyone with any information regarding this device to contact detectives at Strand Road on the non-emergency number 101,” Detective Sergeant Brian Reid said.
“Or if someone would prefer to provide information anonymously they can speak to the Crimestoppers charity on 0800 555 111.”