Withdrawing a large sum from your checking account can feel intimidating because you might wonder if you’ll trigger a red flag or spark a financial investigation. But don’t worry, you’re not the only one wondering what might happen! Here are 15 things to expect.
Your Bank Is Required to Report It
When you withdraw over $10,000, banks must report the transaction to the IRS. This is required under the Bank Secrecy Act (BSA) to prevent money laundering and other illegal activities. A Currency Transaction Report (CTR) is a routine process affecting anyone withdrawing large sums of cash, business or personal.
You Won’t Get Into Trouble for Withdrawing Large Amounts
The reporting process isn’t meant to get you into trouble, and you will be fine if you can explain why you’re withdrawing the money—like buying a car, paying tuition money, or paying for a home improvement. It’s about transparency, not punishment, and is only an issue if there’s suspicious activity.
Don’t Try to Bypass the $10,000 Limit
Some think they can avoid the reporting process by withdrawing smaller amounts over several days. This is known as “structuring,” and it’s illegal. Banks are trained to watch for this behavior and report it as suspicious. Stick to one large withdrawal to avoid potential issues.
Your Withdrawal Might Be Delayed
Unlike smaller withdrawals, pulling out over $10,000 might take time. Banks don’t always readily keep large sums of cash available, so they may need a few days to arrange it. If you’re planning a big purchase, you should notify your bank in advance to avoid delays.
You’ll Need to Show Identification
Withdrawing large amounts of money usually requires more than just your bank card. Always show a valid photo ID, such as a driver’s license or passport. Banks take extra security steps to ensure the account holder is the one making the withdrawal request and that it is not theft.
You Can Request a Bank Draft Instead
If carrying over $10,000 in cash makes you uneasy, you can ask for a cashier’s check or bank draft. These forms of payment are often safer if you’re making a purchase or transferring money elsewhere. Just be mindful that bank drafts can take several days to clear and can be more expensive than other methods.
The Bank May Ask Questions
Don’t be surprised if your bank asks why you’re making a large withdrawal. It’s part of their responsibility to ensure the funds are being used appropriately and not for questionable activities. While it might feel intrusive, this is for your safety, so explain your reason honestly, and it won’t be an issue.
Large Cash Withdrawals Can Affect Your Credit Indirectly
Although withdrawing over $10,000 doesn’t directly affect your credit score, the way you use the money could. For example, if you plan to use the cash for a big purchase, be mindful of how it impacts your other financial obligations. Make sure you can still manage your bills and avoid missed payments.
You May Need to Pay Taxes
Withdrawing from your account isn’t taxable, but if the funds are linked to a source of income, such as business earnings or an investment, you could owe taxes to the American government. Be sure to consult a tax professional if you’re unsure whether the money is taxable.
It’s Risky to Carry That Much Cash
Carrying large amounts is always risky; whether you’re walking to your car or traveling, there’s a chance the money could be lost or stolen. If you must withdraw that much cash, consider security precautions like not displaying it, traveling with someone, or taking a secure route home.
ATMs Have Withdrawal Limits
If you’re considering using an ATM to withdraw thousands of dollars, think again. Most ATMs have daily withdrawal limits, usually between $300 and $1,000. For anything above that, you’ll need to visit your bank in person and make the request directly at the teller, and this can still take some extra time.
Businesses May Not Accept Cash Payments
If you want to pay for something big, keep in mind that some businesses may not accept large cash payments. It’s worth checking with the vendor or seller beforehand to ensure they can handle that kind of transaction, or consider using a bank check instead. This goes for all payments.
Your Bank Might Charge Fees
Banks and other accredited financial institutions may not charge fees for withdrawing your own money. Still, it’s always worth double-checking, especially with larger quantities or when using a special service such as a cashier’s check, app, or website. You don’t want any surprise fees eating into your money.
Banks Have the Right to Refuse Suspicious Withdrawals
While it’s rare, banks can refuse to process a withdrawal if they believe it’s related to illegal activity. This is part of their obligation to monitor for fraud and money laundering. If your withdrawal raises any red flags, they may ask for more details or decline the request entirely.
It Won’t Affect Your Relationship With The Bank
Banks understand that people occasionally need access to large sums of money for legitimate reasons. As long as your account is in good standing and the transaction is documented correctly, your bank will continue to provide you with the same level of service, even allowing multiple withdrawals.
