How to deposit checks that are wildly out of the ordinary for me?
December 31, 2006 7:55 AM   Subscribe

I have two personal checks, both VERY large, to deposit into my checking account. This is slightly freaking me out since I've never done such a thing in my life (and I've had unusually low account balances for 6+ years). Can I just do this without making my bank suspicious or causing any problems?

Two checks for $10,000 each. One of them I only found out about yesterday and my mind is still sufficiently blown that I am only now starting to think about the practical realities. I already understand that these checks are each the right amount that they will not have tax implications for me on my personal income tax.

The first check is just from my grandmom -- an incredible thing in and of itself, but since it's from a family member and with my same last name, I think no bank would find it that suspicious.

The second check is from a (rich!) friend of the family who apparently got so entranced by all the stories from my volunteer work that she simply wrote out a (completely unsolicited by me) 10K check (yesterday!!!) that she says is for me to use anyway I want. So I had *just* gotten used to getting this huge amount from my grandmom and here comes another equal amount. Pardon me while my head explodes, but more to the point for this question:

I've had this checking account for 6+ years, and my overall average monthly balance has probably been under $100. I just basically live a life that's full of barter and moving around, and not full of money. So I am really not sure if I should just deposit 20K into a bank account that's had next to nothing for six years. I happen to be clean as a whistle so if anybody has any criminal concerns they wouldn't find anything -- but even an investigation is also the last thing I want to bring on my family / friends? As you might guess I'm somewhat scared of money and intimidated by institutions in general (grew up poor and am still pretty marginal).

So, SOLUTIONS: Could I deposit one of the checks straight into a different bank, like open a new checking account? But would that be more or less suspicious??? Or use the second check to buy a savings bond or other kind of account that only is accessible in a long time like 12 or 18 months? Or do I just take a deep breath and deposit both?? Would it help to deposit them at different times?

Also, I bet I could give back either of these checks and ask for it to be a bank transfer to my account instead. If it would look better to do 1 check + 1 xfer?

(p.s., yes, I am taking this newfound wealth very seriously and will carefully not squander it -- I don't want to make my question even longer but trust me on that one!!)
posted by anonymous to Work & Money (55 answers total)
Deposit both of them. It's your money. You are overthinking this. Banks do not care about this sort of thing.
posted by jessamyn at 8:01 AM on December 31, 2006 [2 favorites]

This is a large amount of money to you, but not to a bank. Deposit them. Even if they're suspicious, they will find out immediately whether or not they're "good" from the banks the checks are written from, or they can contact the checkwriters themselves. I doubt they'll do the latter.
posted by availablelight at 8:08 AM on December 31, 2006

Make sure that you remember to look into the laws on gift taxes if you are in the U.S. The exemption currently for gift taxes is 12,000 dollars, but I'm not sure if that's per gifter or total of all gifts in a year. If it's the latter you will have to pay taxes on the 8,000 dollar difference.

Other than that, there is absolutely nothing to be worried about. My dad passed away three years ago and I inherited a similar sum of money and deposited it into a checking account that previously had never seen more than a couple of thousand dollars. Not even a blink from my bank.
posted by spicynuts at 8:12 AM on December 31, 2006

Banks don't care ... the IRS might (I believe the limit you refer to is for cumulative total, not each gift individually -- but check with someone who *knows* before making assumptions as to your tax implications).
posted by devbrain at 8:13 AM on December 31, 2006

Well, you can certainly do it without any suspicion, but you may always want to look into higher-yield instruments if you now have 20k+. A lot of money market accounts start at 10k (although the rest are 25k), or you could put it into an Roth IRA (4k limit for 2006 before 15 Apr) + index fund (good returns plus low expenses).

In other words, now that you have 5 figures of money for the first time, educate yourself on what new options you have available. Money makes money. :)
posted by kcm at 8:14 AM on December 31, 2006 [1 favorite]

Yup, make the deposits. The bank will certainly put a hold on the funds for a few days to allow them to clear, but other than that you won't have a problem.

You say you will not squander the money, and I have no reason to doubt that. I would just strongly suggest that you open up a Roth IRA and deposit the maximum amount you can for 2006 (which should be $4000 unless you have some very unusual circumstances), and then make the same level of contribution for 2007. The '06 money needs to go in fairly quickly (if I remember correctly, you have until you file your taxes), but the '07 money you might want to parcel up into equal amounts throughout the year in order to dollar cost average your investment. That $8k can add up to a tidy sum by retirement, even if you never add another penny. Assuming that your investment makes the long term market average, by the rule of 72 the money will double about every six years. Making the completely wild assumption that you are in your early to mid twenties, and working with round numbers, that money will double at least seven times before you hit retirement. So that's $16k, $32k, $64k, $128k, $256k, $512k, $1.024m; I.E. - that eight thousand dollars, simply put into a no-load index fund and left alone for 42 years turns into a million dollars.
posted by Lokheed at 8:18 AM on December 31, 2006

Walk in and slap it on the counter. I think 10K$ is where they are supposed to report it to the fed gov, and I think some banks have a policy of reporting at some other level, but so what? All the fed gov cares about is drug transactions or taxes, and you can prove where and why you got the money. Besides, drug dealers don't usually do business by check. (If you care, you could ask the bank what their policy is. Just call them. Ask for a personal banker, they answer things like this all the time, and they are there to convince you that your money is better off with them than the next bank, so they'll take good care of you.)
posted by unrepentanthippie at 8:19 AM on December 31, 2006

$10k does get reported, but so what? deposit without delay.
posted by caddis at 8:30 AM on December 31, 2006

That amount in cash would certainly have to be reported for money laundering regulations, but i'm pretty sure a cheque would not come under the same regulations. After all it's pretty easy to trace the source when it's a cheque
posted by derbs at 8:30 AM on December 31, 2006

The bank people won't bat an eye about the check. It will clear processing or not. That is what banks do. No worry.
posted by JayRwv at 8:31 AM on December 31, 2006

Reiterating the opinions above - just deposit them. I would suggest making copies of the checks for your records, and at some point (if you ever get audited by the IRS) you might need a letter from your benefactors to say that they are gifts, not income. You could also deposit them as separate transactions at the same time (i.e., write out different deposit slips for each check) so that they appear as discrete items on your statement.

Really, the bank teller won't care, and the only thing the bank might do is hold off on crediting the majority of the checks' value until they have cleared their originating banks.

Also as suggested above, don't let the money just 'sit' there. Every day it's in that checking account, it's at least couple of dollars every day you are not earning. Definitely look into the options already mentioned, alternatively, a more immediate option is to deposit the money into an online savings account with ING, Emigrant Direct or HSBC, all of which are currently offering in the region of 5% annual interest. Do an AskMefi search on these - there are a few threads discussing them.
posted by DannyUKNYC at 8:33 AM on December 31, 2006 [1 favorite]

The only way you'll arouse suspicion is if you go in there acting suspicious, and even then since the checks are legit, it won't be a big thing. If this is still a big deal for you, take a few deep breaths before you go in.
posted by IndigoRain at 8:38 AM on December 31, 2006

Also, congratulations on your windfall. You must be quite the volunteer for your family's rich friend to feel so compelled to help you. Cheers.
posted by arcticwoman at 8:40 AM on December 31, 2006

Bank Secrecy Act - all transactions, not just cash, but only those exceeding $10,000. The bottom line is, people make these transactions all the time. Thousands are reported every day. Don't sweat it unless you got the money from dealing coke.
posted by caddis at 8:46 AM on December 31, 2006

As to what to do with it, you might look at Internet banks that are offering high-yield accounts. Right now GMAC Bank is close to the top with their 5.2% yield. You can deposit the check(s) by mail to them, or you can put it into your usual bank account and have the funds transferred from there. You can get slightly higher yields at some banks with a CD -- I have one at Netbank at 5.4% -- but it's not that much higher that it'd be worth giving up the liquidity of a money market account.

If you are looking to invest for the long term, I am a big fan of the Roth IRA, as in an emergency you can withdraw your contributions (but not your earnings) without penalty. You have until April 15 of 2007 to put in this year's chunk (up to $4000) and then you can also immediately put in another $4000 chunk for 2007. (In 2008 it goes up to $5000.) I would open the account through a brokerage (I use Scottrade, though you might check out ShareBuilder) and split the money evenly between a S&P 500 index fund and some kind of world or emerging markets fund (check out Vanguard's ETFs, as they have very low fees; their S&P 500 fund has ticker symbol VTI, and their emerging markets fund is VWO). (I like ETFs because you can buy or sell shares at any time for just your broker's trade fee, whereas standard mutual funds often have annoying rules about how much you can put in or take out, and when.)

And as others have said, $20,000 is chicken feed to a bank; they will not be at all suspicious. As caddis notes, the bank only has to report transactions over $10,000 to the government. So if you are paranoid, just make two separate deposits, assuming you want everything in one account.
posted by kindall at 9:23 AM on December 31, 2006

It sounds like the real issue is that you're weirded out by having so much money. Maybe at some level, you don't feel you deserve it, or ought to have it; you have the general sense that something must be wrong with this situation, and that sense is manifesting itself in a fear that the monetary powers that be (most obviously manifested as your bank) are going to come down on you for attempting to rise beyond your natural place in the pecking order.

Just remind yourself that this won't happen. On the contrary, your bank wants you to have as much money as possible. More money in your account means more money for them to use for their own purposes.

Depending on your bank, your new balance may qualify you for a different/better kind of checking account, e.g. one for accounts that keep a running balance of $1000 or more all the time. Also, sometimes credit checks involve inquiries to your bank as to what your average balance has been over the past month or year; you'll now show better results on those. Go you.
posted by bingo at 9:24 AM on December 31, 2006

Last time I deposited a couple of large checks with a low balance, the only thing that happened is they put an annoyingly long hold on the new funds, and lifted it in phases.

You'll be fine.
posted by Good Brain at 9:24 AM on December 31, 2006

Yes, deposit away! They don't care.

And just wanted to say: Good for you!!! I love when good people have good things happen to them.
posted by The Deej at 9:42 AM on December 31, 2006

Banks use your money to make money themselves (more money to loan, invest, etc.), so they like you to have lots of money in there.

It's generally the responsibility of the person who sent the check and their bank to determine if there's something shady about the transaction. At most your grandma might get a call from her bank confirming that she meant to send that much money.

I think you're just scared that things are going so well for you. ; - )
posted by cowbellemoo at 9:48 AM on December 31, 2006

They're cheques, so the bank can see who gave you the money. That's not suspicious to them at all.
posted by easternblot at 9:49 AM on December 31, 2006

The time I went into the bank to *withdraw* fifty thousand, they sent a manager over to key a few passwords, but that was about it. And they are much easier on your putting money *into* their bank.
posted by scarabic at 9:53 AM on December 31, 2006

Unless you're planning to immediately demand to withdraw the money in nonsequential $10s and $20s, I wouldn't worry about it.
posted by SPrintF at 10:18 AM on December 31, 2006

Go ahead and deposit them, put your mind at rest. Carrying around two such large checks is far more scary than depositing them! The bank really won't find anything odd ro suspicious about this. Put the money in your account, so it is somewhere safe for now, then start researching better places to keep it, where it will earn more interest. Seconding HSBC, Emigrant, ING et al
posted by Joh at 10:36 AM on December 31, 2006

I had a single $215,000+ deposit from my share of a poker tournament winnings, and no one said boo. Anything at $10k or above gets reported to the federal government, but the government is looking for regular series of transfers of unreported income consistent with drug dealing, not grandmas giving checks to their grandkids.
posted by commander_cool at 10:42 AM on December 31, 2006

They're gifts. You shouldn't have any tax consequences (but if the giver gave you more than, I believe, $12,000 - he/she would have to pay the gift tax). Since your bank account is long-standing, the hold shouldn't even be unduly long. Definitely at least pop some of the money into a short-term CD while you decide what to do with it. Congratulations!

Make sure you do keep some of the money for yourself, even if you plan to give a chunk away. Sounds as though you've earned it.
posted by clarkstonian at 10:59 AM on December 31, 2006

I am not a tax professional, but this link may apply for your tax stuff. Highly recommend you investigate on your own, though.
posted by WCityMike at 11:05 AM on December 31, 2006

From my experience, the worst you can expect is a phone call from your bank asking if you want to come in and discuss their investment services. That was with larger deposits, but I suspect $20k in an account that was previously student-poverty-level might be enough to trigger it.

(I took them up on it, too.)

Congratulations on the windfall; sounds like you deserve it.
posted by kmennie at 11:20 AM on December 31, 2006

The question you didn't ask: Will the bank report it to the fed gov if you move the money around to a different account? My bank told me no when I asked. They said as long as the accounts are with the same bank, it doesn't count as a "transaction" for reporting purposes, because they know where the money came from. Nobody will think you are money-laundering if you move it as soon as the checks clear. That applies to any size chunk of money. (I was afraid you'd think of that in a day or so.) I believe they also said if you moved it to a different bank, it doesn't count either, if it goes as an EFT, but ask the bank if you care.
posted by unrepentanthippie at 11:49 AM on December 31, 2006

I had to do an international wire transfer for a large (to me!) amount and was also a little nervous about it. Certainly not a routine sum in my financial profile. All the bank did was use it as an opportunity to try and sell me various investment products. No doubt it got reported to whoever it gets reported to. Never heard anything about that. I suppose the powers that be are looking for patterns, not single inheritance disbursements from aged relatives. Probably not even a blip on the radar to the feds. Relax and enjoy.
posted by normy at 12:09 PM on December 31, 2006

Depending on the bank, they may hold you funds. Usually cheques above my credit limit are held for 5 business days, but for a large amount, I've had it held for 30 days before.
posted by perpetualstroll at 12:34 PM on December 31, 2006

The bank will most likely not care.

If the gift tax applies to cumulative gifts, deposit one cheque today and one tomorrow, causing the funds to appear in separate calendar years.
posted by acoutu at 12:44 PM on December 31, 2006

I have nothing new to add to the above but just more re-assurance. Understandably you are weirded out having come upon what is to you such a huge sum of money but The bank are not going to view the deposit any differently than ay other transaction you have made in the past. You are a number in the system and they are just happy that you are keeping your account active regardless of whether it is holding £100 or £10,000

Assuming that your investment makes the long term market average, by the rule of 72 the money will double about every six years.

Lokheed, could you please tell me more about the rule of 72 as I have never heard of it and being in the age bracket you mentioned it would be great to know that a relatively small sum could account for so much when I am due for retirement.
posted by mycapaciousbottega at 12:50 PM on December 31, 2006

address your bank with greater confidence than your question shows: it works for you, you don't work for it. don't take any guff, and remember that there are lots of banks in the world who need depositors to stay in business.
posted by bruce at 1:01 PM on December 31, 2006

By the power of google all is explained.
posted by mycapaciousbottega at 1:02 PM on December 31, 2006

If the gift tax applies to cumulative gifts, deposit one cheque today and one tomorrow, causing the funds to appear in separate calendar years.

Agggh, the gift tax applies to the giver, not the recipient.
posted by caddis at 1:22 PM on December 31, 2006

FWIW, Amboy Direct has one of the best savings rates (5.25% APY) in the country right now for a regular online savings account. The opening limit is ridiculously low, too. (I'm a happy customer..otherwise I have no other interest in them)

Eloan is slightly better (5.38% APY), but they require a $10k opening deposit, although you don't have to keep that much in the account after you open it. In your case, Eloan might be better.

In closer answer to your question, just do it. My biggest checks, for many years, hvae been around $2k, but I went in and deposited a $6500 check the other day and only the normal hold was placed on it. My g/f did the same with an over $10k check and other than the normal hold, nothing interesting happened.
posted by wierdo at 1:32 PM on December 31, 2006

Lokheed, could you please tell me more about the rule of 72

The Rule of 72

"The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years."

Historically, the long term market average (for the US stock market) is about 12%. Some years are much better, some years are much worse, but on average over the long haul the market returns around 11-12%. Twelve percent happens to be a nice, round number to work with since 72 divided by 12 is 6. If you are 23 (again, a nice and easy number to grab for this example), and plan on retiring at age 65, then you have 42 years until retirement. Six goes into 42 seven times. Therefore, by the Rule of 72, if you invest money at age 23, leave it alone for 42 years, and make an average of 12%, your money will double seven times.

These are extremely round numbers. They show the amazing power of time when it comes to investing. For an eight thousand dollar investment, it's potentially a difference of a half million dollars if you invest at age 23 instead of age 29. (Or, I suppose, a difference of retiring at age 65 instead of age 71)

All that being said, I am not an accountant or a financial adviser. Any investments carry risk, and investing in the stock market has the inherent risk of losing everything. Be sure to educate yourself so that you can make wise investments and take appropriate risks to match your individual needs.
posted by Lokheed at 1:40 PM on December 31, 2006

The length of the hold may depend on the origin of the check (cheque). For example, when cashing a foreign cheque (Canadian) at my US credit union, the cheque was subject to an 11 day hold. However, $5k was available to spend right away. If you are getting a lengthy hold then make sure they spot you some funds right away. You should receive a letter that explains all the details of the hold.

nth the "bank won't blink an eye" sentiment.
posted by crazycanuck at 1:42 PM on December 31, 2006

I just deposited an enormous check into an account that normally has less than $500 in it and then transferred it out two days later. Nobody seemed to notice or care, so don't worry about it.
posted by echo0720 at 2:00 PM on December 31, 2006

Unless you're the subject of a criminal investigation, no one will care about these checks. They're large enough that they'll get reported to a Federal database, which is regularly mined for evidence of suspicious activity, but if you're not a terrorist the chance of anything being done about it is low.

Remember that, in the USA at least, it is not illegal prima facie to possess money. If it were illegal to deposit $10000 into your checking account, how would folks do anything involving money?

However, if I were you, I would make great efforts to get to the ATM and get one deposited today. Otherwise, you'll have $20000 in gifts to report to the IRS next year, and as others have said $8000 will be taxable income. If you have $10000 in '06 and $10000 in '07 the gifts are tax exempt. Do photocopy the checks before you deposit them.

You might even photocopy one, deposit it today, then ask the writer of the other one to exchange it for one with a 2007 date on the front of it. Anyone with the wherewithal to write a $10K check would understand the reason for this and comply immediately - they don't intend that you hand a third of their money to the government, they want you to keep it.
posted by ikkyu2 at 3:38 PM on December 31, 2006

At all the banks I know, ATM transactions done after close of business are not considered to occur until the next business day, so you may be too late to follow ikkyu2's good advice.

The Bank Secrecy Act only applies to deposits/withdrawals/purchases of negotiable instruments (Cashier's Checks, etc.) involving $10,000 and over in cash. Even so, it only becomes of interest to the gov't if it begins to fit into some sort of pattern suggesting money laundering/drug running/terror funding. A single reported item will be of negligible interest to anyone.

Your bank will not be in any way suspicious of your transaction, and even if they are, the most they will do is place an extended hold on the deposit. You should anticipate a 5 or 7 business day hold on the majority of the funds. The teller should be able to tell you exactly how long the hold will be, if it matters to you.

Do consider CDs or high-interest savings, if you haven't already, and congratulations.
posted by Rock Steady at 3:52 PM on December 31, 2006

However, if I were you, I would make great efforts to get to the ATM and get one deposited today. Otherwise, you'll have $20000 in gifts to report to the IRS next year ...

This is wrong. As others have pointed out, the gift tax is an obligation of the giver, not the receiver. A giver can give up to $12,000 each to as many people as the giver desires without taxes. The receiver can receive an unlimited amount of money without taxes. For example, a husband and wife could each give $12,000 to each of their three children. This would be $36,000 from each parent and $24,000 to each child, for a total of $72,000.

If you have two checks of $10,000 from two different people, neither the givers or the receiver needs to pay a gift tax.
posted by JackFlash at 4:51 PM on December 31, 2006

The number of posts to this thread is at once truly impressive and supremely retarded.

- Deposit the checks.
- No tax consequences.
- Open a money market account or laddered series of 5% CDs and enjoy the wonders of compound interest.
- The end.
posted by turducken at 4:58 PM on December 31, 2006

As many other posters have said, the bank won't care. My experience when depositing a very large check (inheritance) was that they called me the next day, and asked me how they could better serve me in the future.

Be sure to get receipts for the deposit, and also ask them when the funds will be available. Most banks have a rolling availability plan -- $1000 immediately, $5000 after two days, then the balance after five. The teller should be more than happy to explain it all to you.

And as many other people have said, fund your IRA (for both FY2006 and FY2007 -- you can still make contributions to a 2006 IRA until April 15, 2007) Then CDs, High-Interest savings or a low risk bond fund. (Vanguard's VFSTX is my current favorite.)
posted by printdevil at 5:00 PM on December 31, 2006

The giver may either need to pay tax on the gift or take it off their lifetime giving/inheritance tax exemption, if they've given too much this year already. The givee never needs to pay tax on gifts. There's a lot of good info on this at the IRS' website, but you're not the one who needs to know about it. ;)

CDs aren't really a good idea right now, IMO, as there aren't any decently short term CDs with interest rates higher than the interest rates offered by online savings accounts through many banks, but mutual funds and the like are good choices.

If you go with a 5 year CD, you can sometimes get 6% APY, but anything less and the tiny amount of extra interest isn't worth the lost liquidity, to me.
posted by wierdo at 5:20 PM on December 31, 2006

in the USA at least, it is not illegal prima facie to possess money
posted by ikkyu2 at 3:38 PM PST on December 31

That doesn't mean it won't be taken by law enforcement and not returned, though. Anonymous, just make sure that you don't keep any of that money in the form of cash on your person.
posted by Optimus Chyme at 5:47 PM on December 31, 2006

just 3rding everyone else; the gift tax is the obligation of the giver, not the receiver. and assuming these gifts are the only gifts from the particular person in 2006, no gift tax is required as it is below the $10,000 limit.

also, seriously, the bank won't care. i regularly deposit checks this big at the ATM. no big whoop.

don't blow the money! i was given $20k in 1988 and if i had just put that money into the stock market instead of blowing it on computer crap... well, that $20k would be $150,000 right now, easy.

spend some of it, but invest the rest.
posted by joeblough at 5:52 PM on December 31, 2006

I was wrong; JackFlash is correct. Here's the scoop on the gift tax. Nothing for the original poster to worry about.
posted by ikkyu2 at 6:32 PM on December 31, 2006

BTW, the only thing that really freaks banks out is large withdrawals of cash. Once you walk out the door, it's done, so they're very paranoid. And it can screw up their cash flow if they're a small branch.
posted by smackfu at 6:40 PM on December 31, 2006

To echo other MeFites, the bank won't care, provided you're telling the truth about where the money came from. They deal with far more spectacular transactions on a daily basis.

Plus the money is flowing the right way: in.
(By the way, congratulations!)
posted by Count Ziggurat at 9:19 AM on January 1, 2007

Go ahead and deposit them, but be prepared for the banks to put one of their bullshit many day holds on them.

Then let the money sit in your account for a month or so, and gawk at it lovingly. ;-)
posted by drstein at 5:51 PM on January 1, 2007

Congrats on the windfall! Last spring I had to deposit a large amount as well (over $50,000)...unfortunately it was part of the liquidation of my retirement account, which I was going to need to survive unemployment!

However, it was no problem. The money went into my checking account, and a week or two later was wire transferred to GMAC Bank, with whom I am VERY happy. Most of it went into their money market, more into a CD. I suggest doing something this. Having a substantial amount of the money in long-term savings, someplace you can just forget about it for awhile, is a very good thing. Your semi-nomadic lifestyle may change someday, and money like that will come in handy.
posted by lhauser at 9:32 PM on January 1, 2007

I'm going to go with: Bank won't care. But if you're that worried, call them up and schedule a meeting with one of those non-teller, helper folks who sit at the desks. I'm sure they could assuage any fears you might have about your huge windfall. Congrats, by the way, you sound like you earned it.

When I worked for a realtor, I once deposited a 125,000$ check and they didn't bat an eyelash. Of course, it was a business account in good standing, but I had that check in a death grip the whole way there!
posted by GilloD at 7:37 AM on January 2, 2007

They probably will put some sort of hold on it. It'll probably be a few days at least until the money is available. I know because a few years ago I deposited a personal check for $11,000.

Also be aware that if you use large chunks of it at once (to say, pay off a credit card or buy a new computer) the bank will put a hold on your account in order to confirm it's really you making the purchases.
posted by Jess the Mess at 10:44 AM on January 2, 2007

Just deposit the checks as normal at your bank. You can't turn around and take $20,000 immediately but once the checks have cleared you can.
posted by dgeiser13 at 9:41 PM on January 3, 2007

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