Everyone needs a bank checking account to pay utility bills, make purchases in shops, and pay for their children’s education and entertainment. What are the limitations that can be imposed when you use a checking account?
What is the maximum amount of money that you can deposit with the bank account in one go?
On the one hand, the bank is interested in the maximum amount of your transaction. On the other hand, it has to comply with legal requirements and prevent the laundering of proceeds of crime.
It practically means that you must have relevant proofs for each deposited amount (especially if it is connected with a large amount of money), such as:
- invoice
- bank statement
- tax return
- proof of inheritance
If the amount of money is large or it comes from an unexpected source, the bank can automatically freeze it and turn to you for explanations.
Another limit can be set on contributions in cash. Many developed countries allow you to deposit and withdraw a certain amount of money at ATMs per day or month (for example, you can withdraw up to 8,000 euros a month and deposit up to 6,000 euros a month). Exceeding the limit can entail additional fees (if you withdraw cash) or the transaction can be turned down.
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The minimum balance you can have on the checking account
While the upper limit is usually not set, the lower limit can often be expressly stated. The bank may require you to keep an amount of at least 100-2,500 dollars or euros in your checking or another account. It can be a mandatory or a recommended condition. In the second case, people that comply with the minimum deposit requirements do not pay the service fee or get other bonuses.
There are also banks that do not require a minimum balance on the checking account. These terms are most often available to the residents of the country where the bank is operating. Foreigners that open a bank account from abroad are most often required to make a deposit and/or keep a minimum balance.
This is applicable to individuals and legal entities alike.
Recommended balance on the checking account
The checking account can be used for everyday spending. Besides, people often get a salary or other active income to it.
Experts recommend keeping an amount of money in the checking account that will be enough for 2 months of everyday spending + 10-30% to avoid a possible overdraft (a negative balance on the card or account).
Compliance with this recommendation will help you reduce the following risks:
- occasionally exceeding the required amount of spending
- stealing of a substantial amount of money
- avoidance of fee/fine for overdraft
It is recommended to keep the remaining money on a deposit, investment, or checking account that is less accessible: for example, if there is no card attached to it. Thus you can separate your investments and savings from everyday expenses.
It is also worth noting that the amount of money in the bank account can influence the amount of fee (for example, there is no fee if it exceeds the recommended minimum deposit).
If you get services from a bank, mind the terms of cash withdrawal/depositing. Sometimes you can find a bank where the amount will be higher and the fee will be lower, and in some cases, there will be identical conditions for all banks in the country.
Other aspects you can pay attention to when you open a checking account
Things that you should take into account when you choose a bank for cooperation:
- how reliable the bank is and whether it has a liquidity reserve
- whether it participates in the deposit insurance program
- which money transfer system it uses (SEPA, SWIFT, or others)
- amount of service fees: receiving/withdrawal of money, cash withdrawal, the opening of new accounts, etc.
- Whether it can provide all the products and services that you need: debit/credit card, deposit, brokerage account, and other services
- Whether it can provide internet banking and mobile application, and what the speed of requests processing is
It should be remembered that money transfers can be made in different ways around the world. The banks can ensure instant money transfers within its group or with close partners, otherwise, the transaction will take 1-3-7 working days.
If you want to choose a bank that will be profitable and suitable for you and your business, you can book a free session where we will help you choose an account. Write to info@offshore-pro.info.
