Several big banks no longer let you deposit cash and coins into someone else’s checking account unless you become a joint owner.
While adopting the policy is at the discretion of each bank, there is a reasonable chance you are affected. The biggest banks — Bank of America, Wells Fargo and JPMorgan Chase — have no-cash policies for unauthorized individuals.
As the banks see it, the decision to ban cash helps prevent money laundering and fraud — cash is hard to trace, after all. It’s also expensive to process. For you, the policy may interfere with something you want to do. Now, the good news. If your bank won’t let you deposit cash into someone else’s personal account, you have other options to achieve the same result.
Under the Bank Secrecy Act, financial institutions must take certain steps to detect and combat money laundering, like reporting suspicious activity and transactions involving more than $10,000. But adopting certain policies – like stopping consumers from depositing cash into others’ accounts – is at the discretion of each bank, says Steve Hudak, a spokesman for the Financial Crimes Enforcement Network.
“It’s up to the bank to have policies and procedures in place to be able to file these reports and this is also based on risk,” Hudak says. There’s not a rule that says precisely what transactions banks can accept but they have to base their policies on risk.”
Five alternatives to cash deposits
While you might feel inconvenienced, you have alternatives — some of which are quicker than depositing physical cash into someone else’s account at a branch.
1. Make an electronic transfer
You can easily transfer money into a friend’s or relative’s account through a service such as Venmo, PayPal or Square Cash. Zelle is also a good option to move money into someone else’s account. Bonus: Your bank — and the person you are sending money to — may already offer Zelle in its mobile app or online banking, so you won’t need to sign up for another account.
However, take precautions with using any of these digital options. When you send money to someone else through these kinds of services, the payments are often irrevocable. Only send money to people you know and trust to avoid falling victim to a scam.
If your bank doesn’t offer Zelle, you can still send an electronic bank transfer through your online banking account in another way. Instead of entering an email address or phone number as you do through Zelle to send someone money, you will likely need to enter the recipient’s bank account number and routing number to make a transfer. While Zelle moves money in minutes, this kind of bank-to-bank transfer can take a few days.
2. Write a check
While paper checks are falling out of favor, you can still deposit a personal check into someone else’s personal account.
Sure, check fraud is possible. However, checks pose less of a threat to banks than cash deposits because financial institutions can trace the money.
“The key question is always: ‘Where did you get that money?” says Marc Trepanier principal fraud consultant, ACI Worldwide. “With a check, we know where it came from. It came from another account.”
The person receiving the check could also deposit the money via a mobile banking app to avoid a bank branch visit.
Unlike cash, the downside is your bank won’t always make the funds available immediately.
“The check can clear and settle in hours depending on the circumstances,” says Bob Meara, senior banking analyst at Celent, a financial services research and consulting firm. “But most banks wait a business day for funds availability for most customers simply so they can see if the check clears.”
Each bank will make a risk management decision to decide its policy.
3. Send a money order
If you don’t want to use a personal check to deposit money into someone else’s account, sending a money order is an alternative old-school option.
You can buy a money order at banks and credit unions, a U.S. Post Office, some big-box stores and more. It will cost you, but the price tag is relatively cheap. For instance, the U.S. Postal Service (USPS) charges $1.25 for buying a money order up to $500 (so long as the destination is in the U.S.).
The payment method is safe: You will get a receipt for your money order. Even if a money order is lost or stolen, you can usually replace it.
[READ: How to fill out a money order]
4. Add an additional owner to your account
Giving someone direct access to your bank account is perhaps one of the easiest ways to transfer money between your accounts. But like a joint credit card, joint bank account ownership can cause problems, especially if something is awry in the relationship.
“When opening a joint account, it is important to keep in mind that both parties are equal owners of the funds in the account and have access without the other’s consent,” says Luis Rosa, CFP, founder at Build a Better Financial Future, a financial advice firm in Henderson, Nevada. “If the relationship sours, one party can deplete all of the funds in the account, leaving the other party without their share of the funds.
5. See what other banks offer
Not every big bank has a policy that bans depositing cash into someone else’s personal account. PNC Bank, for example, still permits the practice.
In addition to the opportunity to deposit cash into someone’s personal account, a different bank may offer other perks, such as better rates on CDs, savings accounts and mortgages or even a more useful mobile app.
“Look for the bank that is known as being the most consumer-centric,” says Ciaran Chu, payments cloud lead at ACI Worldwide.
- Risks of joint bank accounts
- Paying people back is easier than ever using apps — but so is making accidental payments
- How to open a savings account
— Bankrate’s Amanda Dixon wrote the original version of this story.
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