Content of the material
- Withdrawing to Cards
- How can I use my credit card to raise some cash quickly?
- How can I transfer money from my credit card to my bank account without paying interest?
- The Rules on Withdrawing Large Amounts of Cash
- Structuring with smaller amounts
- Safer Options to Consider
- Use your credit card
- Get a cashier’s check
- Transfer money electronically
- How can I choose a money transfer credit card?
- Can someone withdraw money with my account number and routing number?
- Can I transfer from a credit union to a different bank?
Withdrawing to Cards
In the case of cards, you can ask PayPal to switch off automatic currency conversion, and have the conversion happen on your bank’s side, which will give you a better rate. I wrote about how to do this in my earlier post on currency conversion and PayPal. There are still two inconveniences when withdrawing in this manner:
- You will be forced to convert USD to your home currency upon withdrawal.
- There is a limit per transaction of $2,500, and an associated fee per transaction.
These two points are problematic. Let’s say that your home currency is in a weak position and you would therefore store money in USD and convert later when things improve. You cannot do this as you can’t do a straight through USD-USD transfer, given that your card will be denominated in the local currency. You can open a local bank account in USD but you won’t be able to get a card associated with it. At least that’s the case with all the banks I’ve checked so far. If you find a bank that lets you do that, please leave a comment and let me know.
The limit per transaction poses some obvious problems. Let’s say you are a high-volume seller and you want to withdraw $100k per month from PayPal. You will have to make 40 separate transactions and you will be charged for every single one of them. Of course, all you ever wanted to do is one transaction, if only PayPal let you do that. Apparently, this limit per transaction is dictated by the card providers (for example MasterCard or Visa). Still, it’s not convenient for serious sellers.
If your bank does not provide good conversion rates, remember that some PayPal users have had success linking their PayPal account to digital banks such as Revolut, Wise and N26. They typically provide much better rates than your local bank. You might want to give that a shot since opening an account with these digital banks is free anyway.
Note that as from April 2020 the $2,500 limit seems to have been modified, as I have been able to make significantly bigger transfers to the debit card. I’m not sure if this is a glitch or whether something really changed from PayPal’s end.
How can I use my credit card to raise some cash quickly?
This is how a money transfer credit card works:
* You have a set amount of money which you can borrow on your credit card. That is called your available credit.
* If you need some money you can transfer some of your available credit to your bank account from your money transfer credit card.
* You will be charged a one-off fee for the money transfer which is usually around 4% of the total amount you are transferring.
* When you have made the transfer the debt will show up on your credit card balance. You will be sent a statement each month and you need to pay off the minimum monthly amount as you would with a normal credit card. Pay off more if you can.
* Using a money transfer from your credit card this way will reduce your overall credit allowance until you clear the borrowing.
* It is best to use a money transfer credit card to do this rather than an ordinary credit card, because the charges will be lower.
* There are other, cheaper ways to borrow long-term so only use a money transfer credit card in an emergency and think about how you will pay it back.
How can I transfer money from my credit card to my bank account without paying interest?
Money transfer cards give you a length of time to repay the money at 0% interest in exchange for paying a balance transfer or money transfer fee.
The longer the period of interest-free credit, the higher the transfer fee. So if you want to borrow money from your credit card to pay into your bank account for 12 months, then typically the money transfer fee might be 3%.
If you wanted to have 0% interest rate on the money you have transferred for 24 months, then the fee would be higher, probably around 4%.
The Rules on Withdrawing Large Amounts of Cash
When you go to deposit more than $10,000 at a time, your bank, credit union or financial provider is required to fill out a currency transaction report to the Internal Revenue Service.
It’s mainly for security purposes.
The big reason is:
Under the Bank Secrecy Act (BSA), the government wants to make sure you’re not exploiting your bank to fund terrorism or launder money, or that the money you’re depositing isn’t stolen.
Why $10,000 and not $8,000, or $3,000?
The IRS decided that it’s a nice round number that’s large enough to arouse suspicion since deposits of that size are a rarity.
Structuring with smaller amounts
With deposits, some people try to get around filling out IRS Form 8300 by making their $10,000 in smaller increments: $2,000 in on deposit, $5,000 in another, and so on.
However, watch out.
This can trigger an IRS investigation and land you in hot water with the Feds, who call this practice “structuring” (and in some circles, it’s called smurfing).
Structuring is an apparent form of money laundering that assumes you’re trying to circumvent federal rules and regulations by making smaller deposits in the hopes of authorities that the $10,000 cash deposit goes unnoticed.
The same applies with withdrawals. Deposit or withdrawal, a transaction is a transaction, so a bank withdrawal over $10,000 will involve the same process.
Safer Options to Consider
The bottom line is…
Huge withdrawals are not only inconvenient but unsafe.
A stack of $10,000 in $100 bills is only a half-inch thick. If you withdrew $100,000, you’d have 10 of them on hand.
Withdraw $1 million, that’s 100 stacks. You’ll look relatively inconspicuous carrying around a suitcase, or even an envelope, full of large bills.
But, that won’t deter a thief from robbing you or breaking into your house knowing you keep cash there.
Plus, anyone with the financial savvy to amass significant funds in the bank should be aware that non-cash methods of investment, deposit, and withdrawal are the smartest — and safest — ways to transact money.
Consider some ways to move a large amount of money without transferring cash physically (ATM withdrawals don’t count; they have limits, too):
Use your credit card
If the cash withdrawal was meant to pay for a purchase, better to put it on your credit card and pay the balance off.
It may mean getting charged interest if you carry a balance from month to month, but it will keep your credit revolving and avoid the risk of carrying a bank’s worth of cash around.
Make sure to check your card’s credit limit first.
Get a cashier’s check
Instead of withdrawing, say, $100,000 in cash, have your bank draft a cashier’s check in your desired amount.
A perfect (and ultimately safer) substitute to carrying around dangerous amounts of cash, the best thing about cashier’s checks is that they work like regular personal checks, but their payment is guaranteed by the bank.
Keep in mind:
There are nominal fees for cashier’s checks (most banks charge about $5), but for large amounts, your bank may waive the fee.
If the check is lost or misplaced, you may also be responsible for purchasing an indemnity bond before you can have a new check issued.
Transfer money electronically
You can use a wide range of methods to transfer money without ever handling the cash yourself.
How can I choose a money transfer credit card?
If your current card does not offer a money transfer facility, you can compare and find money transfer cards with Uswitch.
It is worth comparing cards to find the best money transfer credit card for your needs. This will depend on how much money you want to transfer into your bank account, how long you need to borrow the money from your credit card, and how you plan to pay the money back.
Can someone withdraw money with my account number and routing number?
Maybe you’re wondering: How can someone steal money from my bank account using my account number and routing number? As discussed in the previous section, it is possible for someone to get money from your account using two methods: ACH transfers and using fraudulent checks.
So, the answer is YES – someone can withdraw money by using these methods.
These two methods are serious crimes that’s why most thieves target commercial bank accounts because they tend to hold more money. However, it is also becoming more common for fraudsters to target small and medium businesses and even individual account holders because they usually have fewer security protocols.
Some fraudsters also avoid transferring large amounts of money at once, instead, they tend to make smaller ACH transfers so they will not be red-flagged. If an account holder is not careful about tracking expenses and monthly billing reports, these illegitimate ACH payments could even go undetected.
As we mentioned earlier, the best defense against unauthorized withdrawals is for you to set up bank account monitoring with Identity Guard. They’ll alert you when information changes or withdrawals happen on your account, you’ll get your stolen funds recovered and a case manager will personally help you to resolve fraud related problems. Check them out by clicking on this link.
Can I transfer from a credit union to a different bank?
As long as you know your checking account number and the routing number of the other institution, you will be able to transfer funds between your credit union account and another bank. When you set up the electronic transfer, your credit union account will send small deposits to the other account to verify the connection. After these small tests, you will be able to transfer between the accounts as needed.