It's increasingly rare to use cash, but you will likely need to pay with cash at some point. When you do need cash, like during a private, person-to-person transaction, you might find that you need more than the automated teller machine (ATM) daily withdrawal allowance (typically $300—$1,000 depending on your bank). If you're buying a car through a classified ad, for instance, $300 probably won't cover the cost of the purchase.
Planning ahead can spare you headaches and inconvenience. Withdraw limits exist for an important reason. By better understanding these limits, you can work within the rules to meet your cash needs, even if you waited too long to start withdrawing the money.
Reasons for Withdrawal Limits
Generally speaking, there are two primary reasons that a bank imposes withdrawal restrictions on its customers: cash availability limits and security concerns.
Cash Availability Limits
When you deposit a paycheck into your checking account, the bank doesn't simply store that cash in a vault and wait for you to withdraw it. Instead, banks put the money to work for the institution, bundling it with other people's deposits to loan out money to individuals and businesses.
The bank lends out the cash you deposit, but your money is protected, so long as you're using an FDIC-insured account. If risky loans force a bank to go out of business (and this rarely occurs), you're insured up to $250,000 per institution.
Even if the bank did keep your cash at the ready, it would be impossible to know which ATM to keep stocked with cash to meet your needs. Are you going to use the ATM at your local bank branch, or the one at your nearest corner store? Withdraw limits help ensure that customers can't clean out ATMs or drain the bank's cash reserves.
Banks also limit ATM withdrawals in case someone steals your ATM card, knows your PIN, and tries to empty your account. Federal law protects you from losing more than $50 through this kind of theft, but to qualify for protection, you've got to report it to the authorities within two business days.
If a rarely used card is stolen, and you don't notice for a long time, it could be difficult to get your money back. Withdraw limits help reduce the speed with which a criminal could empty your account.
Different Accounts Have Different Limits
Most people can access both their checking and savings accounts through an ATM, but banks impose different kinds of limits on the two accounts. While checking accounts have a limit on the amount of money you can withdraw, savings accounts have a limit on the number of withdrawal transactions you can complete in a month.
You can take out more money from an ATM through your savings account, but you can't make more than six withdrawals per month. This is a federal law, so the limit applies to all savings accounts with all banks.
Maximum Daily Withdrawal Limits Vary
If you often need larger sums of cash, it pays to ask about daily ATM limits when choosing your bank. Some banks limit daily cash withdrawals to $300. Bank of America, on the other hand, allows for up to $800 in daily cash withdrawals, and most Citibank accounts allow for up to $1,000.
It isn't only the bank you have that determines your withdrawal limits, but your account type, as well. Some special accounts, such as student accounts, may have even lower limits as a way to help students manage their spending.
How to Get More Money
You can't get rid of ATM withdrawal limits altogether, but there are alternative methods of meeting cash needs that exceed the limit.
Get a Cash Advance
You can bypass the withdrawal limit if you go to a bank, and, instead of using your debit card, use a credit card for a cash advance. You don't have to go to your own bank—any bank can accommodate you. Keep in mind that banks may charge a fee for this service. It's also expensive to use a credit card to get cash because most card issuers start to charge interest immediately, and at a higher rate than for purchases.
Get Cash Back at a Store
Grocery stores, gas stations, and bodegas usually allow customers to get cash back if they make a purchase. However, debit cards often have daily limits on in-store transactions, as well. If you attempt to receive a large amount of cash back at a store, you might find you're still subject to certain limits on how much you can spend.
Ask Your Bank to Raise Your Limit
To prevent yourself from getting in a tight situation in the future, you can ask your bank to raise your ATM withdrawal limit. Of course, this depends on the maximum that your bank allows and your standing as a customer. If you go into a brick-and-mortar branch, you may be able to take out larger sums of money upon presenting your ID to a teller.
The Bottom Line
ATM withdraw limits are there for your protection as well as the bank's, but that doesn't mean they aren't occasionally inconvenient. For those who regularly need cash, it's a good idea to find out the bank's daily ATM withdrawal limits and plan ahead. If you anticipate getting caught in a cash squeeze, switch to a bank that meets your needs, or ask your bank to raise your withdrawal limit.