Why do banks have daily deposit limits for check deposits with app?
I have a bunch of accounts at Fidelity and use their app to deposit checks on my phone. Each account has a daily deposit limit that is based on a number of factors, but the most important appears to be the current balance of the account (higher balance gives you a larger daily deposit limit).
For my business account, I withdraw most of the money at the end of the quarter to pay taxes and myself. Afterwards, my deposit limit is low so I can't use the app and have to mail checks in.
I've vigorously complained to Fidelity about the low deposit limit, but they refuse to increase it. It seems odd since I've been a Fidelity customer for 15 years and I have all my retirement accounts with them.
Why do banks impose deposit limits like this? What is the risk, especially for long-term customers like myself?
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Adding to the other answers, this is also depending on the bank.
I have accounts with several banks, and for example BoA and Chase have increased those limits after some time of proper usage (=no fraud) to 50000$ - far more than I'd ever need (the account balance is typically only three or four digits).
So, as much as you won't like it, changing bank might solve your issue. Maybe you could simply open an additional account just for depositing checks.
I don't think you'll get a satisfying response. The standard line is that the limit is intended to prevent fraud because you still have physical copies of the checks you (or someone else) could attempt to deposit them at another bank. I'm not sure that perceived risk is very great, since they can typically verify checks immediately, could require bank account number as part of endorsement, and could reverse deposits if funds weren't available due to double-cashing attempts, but that's their reasoning.
They could easily monitor customer behavior and set the limit according to expected deposit amounts, much as they do behind the scenes setting NSF/OD decision logic on a per customer basis, but seem to have decided that's not worth the risk/cost.
If you have a high volume of checks and this is a common problem you could look into remote deposit options.
There are three types of risk being avoided here. The first is the most obvious and blatant check fraud. Because the law requires policies to be applied uniformly, then exceptions have to have policies as well. In other words, if Policy A does not work for customer X, then customer X has to qualify under a broad exceptions rule to make Policy B available to them. It simply costs less to mass deposit online than to have a person walk in the door, place themselves on camera and in the same police jurisdiction as the bank and commit fraud in person. Blanket policies have no marginal cost in this case.
The second is money laundering. Any large deposits could potentially trigger a money laundering investigation. Having a person deposit the funds in a branch gives the bank or other financial institution a chance to "benignly" interrogate the customer.
The third is kiting. Even a financial institution has been caught kiting before. Some elements of the check clearing system are quite dated. The US is decades behind other parts of the world. You can still do kiting in the US and get away with it. Nonetheless, kiting is a crime and it is one a bank is responsible to detect. Kiting becomes easier if you can deposit electronically.
Accepting deposits create liabilities and placing a physical limit on deposits reduces them. A physical check can have fingerprints on it, an electronic check cannot. An in-person deposit requires a person to go on camera, an electronic deposit could even happen in the International Space Station.
The risks for long-term customers is incredibly low. That said, there are plenty of fraud cases of good firms that had a sudden change in management or accounting that suddenly became a bad risk. Blanket policies are the problem and the inability to underwrite individual firms and people. Of course, the fees would have to go way up if they were to allow all potential customers to undergo individual underwriting.
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