Limits on Bank Withdrawals

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Posted: Wed Mar 27, 2013 8:46 pm

I have been following developments in the Cyprus banking crisis story very closely. I am fully aware that this banking crisis is deeply intertwined with European Union politics so let me assure you that I am going nowhere near the politics of this situation with my comments. The only reason I mention Cyprus at all is that this situation has reminded me of recent personal banking experiences that some may find valuable.

As we all know, you can walk into your bank (or go to your ATM) and, provided you have sufficient funds in your account, get cash. What I suspect many people do not realize is that there are limits to such requests. I learned this the hard way. For many years, I kept about $25,000 in a “money market” mutual fund administered by a very large and well-established company. These “money market” funds are considered very low-risk so they paid only about 3% - 5% interest. A few years ago, that interest rate dropped to nearly zero (where it remains to this day). The turmoil in the banking industry and the non-existent return on my investment caused me to decide my funds would be more secure kept in a safe in my home.

So, I got online and logged into my mutual fund account with the intent of withdrawing almost all of my funds (leaving just enough to keep the account open). When I tried to transfer the $25,000 from my mutual fund account to my personal checking account, I discovered that the mutual fund company would only allow me to move a maximum of $5,000 per week. That was mildly distressing but, I thought, at least I can get my hands on a significant chunk of my money rather quickly so I issued an order to transfer $5,000. It took a few days from the time I issued the transfer order for the funds to hit my checking account. When they did, I went to the local branch office of my bank (one of the largest in the US) and asked for $5,000 in cash. Much to my dismay, I was told I could only get $1,000 in cash per day. It took the better part of 2 weeks to convert one-fifth of the funds in my mutual fund account into cash. I had to go through this routine 5 times (with 25 trips to my bank) to get my hands on all of my $25,000. This took almost 2 months.

I tell this tale to make people aware that limits on bank withdrawals are not imposed only in severe crisis situations like Cyprus. They already exist – at least in some countries and with some financial institutions. I suspect such limitations are commonplace.

The morale of the story is: You should find out what the limits are on your ability to move your funds around and to convert bank deposits into cash. It may be more difficult than you think. And, if you ever contemplate converting your deposits into cash, you may need to give yourself PLENTY of lead time to do so.

Hello I'm New here! Joined: 28 Feb 2013 Posts: 4

Or you phone your bank in advance and say I'm needing my £25'000 out in cash please. I'll collect it in 7days, thanks!

Worked for me when I was buying a car anyway. (Cheaper price if it's cash in hand.) I had to prove I had adequate security, but that wasn't an issue as the boyfriend is a hairy scary biker dude and he brought a couple of mates along to help. Wink

Posted: Wed Mar 27, 2013 10:39 pm

We can use this to our advantage - we are dying to send the lad his money, but we foolishly deposited all our monies in a Cyprus bank, and it has been frozen.

Posted: Wed Mar 27, 2013 11:48 pm

I used to do a lot of wheeling and dealing in antiques, and in that realm, cash is king. I never had any problem walking into my bank and taking out $9K at one time. Or more, if I was willing to fill out Federal forms (required on any cash withdrawal or deposit in excess of $10K).

If I were planning to go to a major show I would withdraw $9K one week, and another $5K-$9K the next, depending upon how much I anticipated needing. Again, never a problem. Technically, however, the IRS could have jumped all over me because they have rules about evading the $10K documents-needed regulation with the sort of ploy I used.

I'm surprised they restricted you to $1K per day. That has simply never come up with my bank. The only restriction they place is on the amount I can withdraw from the ATM on any given day.

(I have retired from the show circuit so I'm no longer playing with so much cash anymore, but it does blow my mind when I think about all the times I would get on a plane with anywhere from $10K-$25K in my carry-on. And that I was routinely spending upwards of $100K a year in cash. Shocked

)

Baiting Guru Joined: 31 Jan 2007 Posts: 12237

Juan Freizwidatt wrote:

I was routinely spending upwards of $100K a year in cash.

Thanks for the info.

Love,

Your friends at the CIA, NSA, FBI, DHS and several other three letter entities.

Posted: Thu Mar 28, 2013 5:18 am

^^^^
NB: past tense. That was before I retired. And I did declare my profits. I was in the odd position of buying for cash but selling for checks and credit cards, which are fully documented. No getting around that. My only worry was if I ever was audited. How to defend my cost of sales based on my own handwritten notes?

Posted: Thu Mar 28, 2013 8:29 am

I am sure withdrawal limits vary significantly depending on what country you live in and what bank you use. These limits probably also vary over time so what may have been true a short time ago may no longer be so. As the debt/banking crisis has deepened, this has become one of my concerns - that much stricter limits (all the way up to shutting down banks as was recently done in Cyprus) could be imposed with little or no notice.

I am concerned about this because my wife and I have significant funds in tax-deferred retirement accounts. If I were to hear of proposals to confiscate a large percentage of those accounts (such proposals have recently been made in Cyprus), I would start seriously thinking about pulling our funds out of those accounts. There would be taxes and penalties to be considered but a couple of years from now that will be less of an issue. The bigger problem might be the logistics of actually converting those accounts to cash.

I may begin shopping around at other banks to see what their withdrawal limits are. It might be a good idea to link each of our retirement accounts to different checking accounts in different banks. This could increase the speed with which funds could be withdrawn significantly.

Baiting Guru Joined: 31 Jan 2007 Posts: 12237

^Here is a good blog, if you are interested in this kind of stuff.

http://www.zerohedge.com/

Posted: Thu Mar 28, 2013 12:55 pm

Quote:

If I were to hear of proposals to confiscate a large percentage of those accounts (such proposals have recently been made in Cyprus), I would start seriously thinking about pulling our funds out of those accounts

Not sure where you live, but it was proposed in the US during President Clinton's first term (15% tax).

http://www.businessweek.com/stories/1994-10-30/private-nest-eggs-dont-make-public-safety-nets

On another note, I had a large bank temporarily hold funds (to ensure a check cleared) when I wrote a check from one account in their bank to a different account in the same bank! (I controlled both accounts, but they were not linked within their system)

You mean to tell me it takes 3 business days to confirm there is money in an account in their own bank??

Posted: Thu Mar 28, 2013 1:05 pm

I've used the $1000.00 per day rule in a bait not long ago. Funny how the Lad decided to take 4 smaller payments of $2500.00 rather than 1 lump sum. LOL. Then the first two MG payments didn't go through and I stopped pulling out cash and had to recall the MG payments from my end. Of course I needed an ID-10T from the two payees to get it returned or I would need to go to court to have it returned. (The lawyer wasn't cheap that got my money back either) I never could get the second ID-10T and the second payee was a female. I guess the Lad doesn't have a GF that he wants to involve in the scam.

Posted: Thu Mar 28, 2013 3:01 pm

@IM_Dumm: I live in the US. Thanks for the link to that 1994 article. I won't offer any comment on it so this thread doesn't wander off into the realm of politics.

@Big Al: I can see how withdrawal limits could be useful in baiting but this thread isn't about baiting.

Baiting Guru Joined: 31 Jan 2007 Posts: 12237

https://www.youtube.com/watch?v=YiDDPMw8VO0

Posted: Fri Mar 29, 2013 2:02 pm

^^^

Baiting Guru Joined: 19 Mar 2007 Posts: 2628

Can only speak for UK, well Scotland in particular
there will be a limit in what you can transfer

This will change if you go into the bank and talk to them face to face

and here's a nice thing for you baiters, some banks will not clear online transactions after a certain time of night

Baiting Guru Joined: 19 Mar 2007 Posts: 2628

I've just remembered that I also got questioned about a cash deposit

Posted: Fri Apr 12, 2013 9:14 pm

Try bringing money back into the country.

When I sold my house in Canada and brought my funds back into the USA, we had fun at the bank!!!!! FORMS!!

I dodged the taxes because at that time if you sold a home (which I did in the USA) and bought another home within 2 years you were OK. I just bought my house in Canada which the rule applied.

I did lose some money bringing it back into the US because of the value of the Canadian dollar at that time.

Posted: Mon Apr 15, 2013 8:52 pm

Cash makes no enemies. Let's be friends. Laughing

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