Can You Keep a Million Dollars in the Bank?


MILLION DOLLARS

If you receive $1M right now, what is the first thing you’ll do? Spend it on flashy stuff? No. I doubt that. Many of us will want to secure the money. And what better way to secure such an amount of money than keep it in the bank, right? Maybe or maybe not. You should find out if keeping such money in a bank is possible before taking any steps.

Depositing a million dollars in the bank is possible as banks need your deposit to make money. Thus, it will be unwise for any bank to turn down such a huge amount of deposit.

Stashing a few thousand dollars in the bank seems possible. But when it comes to something as huge as $1m, you may begin to doubt. Below, we’ll find out why banks often allow large deposits coupled with some information that would help you safeguard your huge deposit.

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Can You Keep a Million Dollars in the Bank?

Of course, you can deposit a million dollars in a bank since banks don’t impose max deposit limits. But, it would be best if you considered a few factors before making your deposit. Such factors are:

  • Deposit insurance limit
  • Deposit hold times

Also, worthy to note is that the size of your deposit can harm your interest rate. That said, let’s look at the factors you need to consider before stashing $1m in a bank.

Deposit insurance:

As of April 2018, the Federal Deposit Insurance Corporation insures deposited funds up to $250,000 per account owner per financial institution. If you have a joint account, you can rejoice because you can enjoy $500,000 of total coverage. That is not all. You can also extend your deposit insurance by an extra $250,000 per pay-on-death beneficiary that you add to your account. If you lack co-owners or beneficiaries, you can divide your money across multiple banks. Deposit insurance safeguards you from loss should your bank fold up.

Up next, check holds.

Check holds:

Federal law restricts the amount of time a bank can hold a check deposit. Say you deposit a check for one million dollars; your bank must ensure that $100 is made available the following business day and an extra $4,900 after two business days. What about the remaining money? Well, the bank can withhold it for seven business days.

If you open a new account with the funds, then the bank can hold the entire check except for the first $100 for nine business days. Hold limits don’t affect savings accounts. Thus, theoretically, your bank could retain a deposit into a savings account for a long or short period. They are the boss, remember.

Should You Keep a Million Dollars in the Bank?

After making a huge amount of money, what do you do? While several people will advise that you stash the money in a bank (far from the reach of thieves and your longing desire to splurge it on some fancy materialistic stuff) I would advise that you invest it. So, no, keeping a million dollars in the bank is like letting an extra room in your home rot away when you can easily rent it out and make extra money.

What Is the Most You Can Keep In a Savings Account?

Basically, there are zero limits on the amount of money you can put in a savings account. In fact, no law states how much you can save, and there exists no rule stating that a bank cannot make a deposit if you have a certain amount of money in your account already.

Of course, this doesn’t mean there are no limits regarding your balance, no-no! You see, the only limits you need to worry about are imposed on your savings account balance. And these limits are often imposed by the bank. Only a few banks impose a limit on your savings account’s balance. Remember, banks make money from your money, so it will be unwise of them to stop you from making a certain deposit.

If you find yourself in a situation where a bank turns down further deposits from you, there is nothing stopping you from visiting another bank and opening an account there. In fact, if you have the time, you could open savings accounts at several banks. This could be a good technique for the security of your savings, depending on how much you have.

So, say you have finally decided to deposit $1m in your account, how do you protect it?

How to Protect Over $250,000:

If luck shines on you and you end up having a balance of over $250,000 (or, let’s say, $1m), there are some ways you can keep this money safe. The first is to open a different type of account at the bank and transfer the excess money into it.

You can have a CD, savings account, checking account, and money market account at the bank. Each has its own $250,000 insurance limit, allowing you to have $1million insured at a single bank.

If, for instance, you need to keep over $1 million safe, you can open an account at a different bank. The insurance limit is per account type, per depositor, per bank. This means that you can have $250,000 in two different accounts at two diverse banks, and they’ll both be fully insured.

The FDIC insures both online banks and physical banks, so you don’t have to bother about the security of online banks. Unfortunately, credit unions aren’t protected by the FDIC. However, they often get protection from the National Credit Union Administration. The rules for the NCUA are similar to the FDIC’s.

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Is It Wise to Keep a Large Sum in the Bank?

After receiving a huge amount of money, be it as a paycheck or as a gift, many of us will want to keep it somewhere safe. Of course, a bank remains one of the safest places to keep your money away from the prying eyes of robbers. However, is it wise to keep a huge sum of money in the bank?

Keeping a large sum of money in the bank isn’t wise. Consider investing it rather than keeping the money in the bank where it becomes vulnerable to inflation.

Investing your money is one of the best ways to augment your wealth and move closer to enjoying a life of financial freedom.

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