Should credit card payments be broken up into amounts smaller than $10K?

Question

As mentioned in this answer about bank transaction reporting, a Cash Transaction Report (CTR) will be generated for deposits (or all transactions?) greater than $10K.

So, there are two parts to this question:

1. If you were making that large of a payment (via a cashiers check or other withdrawal means from a cash account) to a credit card, would the payment generate a Cash Transaction Report?

2. If it does require the bank to make a CTR, then is there any harm in that or anything to be concerned about? Such as...

   • Appearing suspicious
   • Personal reporting implications
   • Recordkeeping burden

   Are there any other reasons why one might want to make sure payments to a credit card are broken up made* in amounts smaller than $10K?

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^{* Edited to clarify that transactions should not merely be broken up because that would be "structuring". By "made" I mean that the question is whether one should be mindful to simply not make payments larger than $10K (unless that is structuring too, though, payment amounts should be up to the payer).}

Answer 1

If you were making that large of a payment (via a cashiers check or other withdrawal means from a cash account) to a credit card, would the payment generate a Cash Transaction Report?

Probably, yes.

If it does require the bank to make a CTR, then is there any harm in that or anything to be concerned about (like that transaction appearing suspicious, personal reporting implications, etc.)? Are there any other reasons why one might want to make sure payments to a credit card are broken up made* in amounts smaller than $10K?

You should be concerned if you cannot explain the source of the money (legally...). If you withdrew cash from your own account and paid your credit card with it, in case of questions asked you can show the account statement with the matching withdrawal, and you're done.

The point in this report is to point at people who move around large amounts of cash. Usually, people pay credit cards with checks or ACH transactions, but if you want cash - it's your right, as long as the cash was obtained legally. But if you're paying your credit cards off with the cash you got as a bribe or by selling cocaine on the streets, then you should be worried.

By the way, breaking into smaller payments may not save you from being reported to the money laundering detection agencies. The report is per transaction, not per payment, so if the credit card statement is $11K and you pay $5K and $6K - the transaction is still $11K.

Also, the bank can file a report even if it is not required (it was clarified in the other answer to the same question you're referring to), if the clerk thinks the transaction is suspicious. This leaves the decision on filing a report solely on the banks "common sense" and internal policies which you don't know. So even paying $10 in cash may trigger a report if the bank suspects wrongdoing.

Answer 2

Unless there is a compelling reason to do so, like reducing interest charges, IMO you shouldn't do this.

The fact that the bank teller or a computer files a CTR doesn't imply that you are doing something improper -- it is simply a regulation that banks are required to adhere to. Millions of CTRs are probably filled out over the course of the year. It doesn't add more time to your transaction, nor does it impact your tax or other liability.

Learning about this stuff can instill a sense of paranoia. Don't fall victim to that -- these are measures in place to make it more difficult to dodge taxation and launder money.

Answer 3

From my reading of the wikipedia page (CRT), this only happens if you deposit or withdraw currency, not checks. The idea behind this is that checks, ACH, etc. leave paper trails that can be tracked. Cash doesn't, so it gets this extra level of scrutiny. If yu get a cashiers check or a money order to pay a bill, I don't think a CRT is created. If you withdraw $15,000 to buy a car in cash (1 stack of $100 bills), then a CRT would be generated. It still isn't a problem, as long as you can show a bill of sale showing where the money went (or came from, if you are the seller).

The IRS has a FAQ about this. It says (taken from several spots at that page):

Cash is money. It is currency and coins of the United States and any other country. A cashier’s check, bank draft, traveler’s check, or money order with a face amount of more than $10,000 is not treated as cash and a business does not have to file Form 8300 when it receives them. These items are not defined as cash because, if they were bought with currency, the bank or other financial institution that issued them must file a Currency Transaction Report.

The exception to this is if you are buying something with a resale value of more than $10k with a check, money order, etc of less than $10k.

Answer 4

CTRs are made all the time, and yes, the banks do need to consider one-off transactions that aren't $10,000 per se but amount effectively to $10,000 or more.

But if you're doing nothing improper, just pay your bill and be done with it. No need to split it up just for this reason.

Answer 5

Is this the time of year this board attracts question regarding the law and how to skirt it?

I've done as you suggested. I happened to have a month that I was going to blow through the $12000 limit I had on my credit card. So as the balance crossed $8000, I paid that amount, and when the bill was cut, it was just $4000 or so. Scrutiny would show the reason for partial payments was obvious, I wanted to avoid going over limit. I wouldn't have done so just to avoid the $10,000 transaction. Since then, I've asked that the limit be raised in case I have another wild month.