What Really Happens If You Deposit Over $10K in Cash Right Now?

A few years ago, I sold my motorbike on Craigslist for $11,600. The buyer showed up with an envelope so fat it looked like it could tip over a vending machine. We counted the bills, shook hands, and I drove straight to the bank to deposit the cash.

The bank teller took one look at the cash and asked, "Where did you get all this?"

At first, I wanted to joke, "None of your business!" But I quickly realized it was her business. Legally, she was required to ask. Once a cash deposit hits five digits, things get real formal, real fast.

So what actually happens when you walk into a bank with over $10,000 in cash? Here's what you need to know before you make the deposit.

Why $10,000 is the magic number

When you deposit $10,000 or more in cash, your bank is legally required to file a Currency Transaction Report (CTR) with the U.S. Department of the Treasury.

This law began in 1970 as part of the Bank Secrecy Act (BSA). The goal is to prevent money laundering, tax evasion, and other illegal activities.

Basically, you're not being singled out. It's routine, and it's the law.

Things your bank might ask you

It's not just banks. Credit unions, brokerages, and casinos all follow the same rule.

While there is no official government script banks have to follow, here's a general example of what they might ask you:

1. "What is the source of the funds?" -- Selling a car? Tips? Business income? Just tell them the truth.
2. "What do you do for work?" -- They're checking that the cash amount makes reasonable sense with your job.
3. "Is this your money or are you depositing it for someone else?" -- Obvious checks for money laundering.
4. "What will you be doing with the money?" -- Sometimes asked to understand your intent (but not always).

Again, there's no need to freak out. Just answer whatever they ask you honestly.

What happens after the deposit

Here's the usual process:

• Your bank will file the CTR, which includes your name, Social Security number, occupation, and the source of the funds
• The U.S. Treasury stores it in a secure government database, along with millions of other CTRs filed each year
• No automatic red flag is raised, unless something about the transaction looks odd or suspicious (e.g., stacks of wrinkled bills smelling like weed)

Basically, after your deposit is made and the CTR is filed, life goes on. I never heard another word about my motorbike money.

Don't try to outsmart them

What you don't want to do is try to avoid the $10,000 threshold by splitting up the deposit. That's called structuring, and it's actually a federal crime.

For example if you're being sneaky by depositing $9,900 today and $500 tomorrow -- the bank is trained to spot that stuff, and it could trigger an investigation.

Earning interest on your $10,000+

Once your deposit clears, don't let that money sit idle. You could be earning interest -- compounded daily -- while you decide your next move.

A high-yield savings account (HYSA) is one of the best spots to stash your cash short term.

Personally, I keep about $25,000 in an HYSA (my emergency fund and short-term savings), and I earned a whopping $798 in interest last year.

The best HYSAs pay over 4.00% APY right now, and there are no penalties if you need to move your money anytime.