Notice of Withdrawal

What Is a Notice of Withdrawal?

A notice of withdrawal is a notice given to a bank by a depositor, stating the depositor's intent to withdraw funds from their bank account. This notice applies to both time-deposits and negotiable orders of withdrawal (NOWs) accounts. Banks may also require a notice of withdrawal for savings accounts.

Understanding a Notice of Withdrawal

Notices of withdrawal are typically used only for time-deposit accounts and accounts that bear interest, such as NOW accounts and savings accounts. Banks may require depositors to provide this notice seven days prior to making a withdrawal; however, this rule is usually waived for small cash withdrawals from NOW accounts and savings accounts.

For time-deposit accounts, depositors typically incur a penalty if they wish to withdraw funds from the account before it reaches maturity. Depositors must provide a notice of withdrawal if they want to withdraw money from the time-deposit account early and incur the penalty fee. Some banks will automatically renew a time-deposit account when it reaches maturity, so depositors should give a notice of withdrawal before it reaches maturity so that they can obtain their money in the grace period between maturity and renewal and avoid another accidental renewal.

Each individual bank will have its own requirements on the limits that can be withdrawn with or without a notice of withdrawal, as well as what financial products they apply to, and the number of notice days needed before the withdrawal takes place. This information is typically detailed in the legal documentation that a depositor signs when opening up their accounts.

Notice of Withdrawals for Large Amounts of Cash

Banks may require notices of withdrawal for larger amounts of cash from all accounts. Withdrawals of $5,000 or more, whether from a demand deposit, NOW, or time-deposit account, may strain a bank branch’s reserves of on-hand cash. As a result, banks may require at least seven days’ notice of withdrawal for large cash withdrawals. Larger, global banks, typically won't have this requirement, particularly for lower amounts, whereas smaller, local banks might due to their lower levels of deposits.

In the case of extremely large withdrawals, banks may require more than seven days’ notice. For example, in 2012, a customer at Dollar Bank, which serves the Pittsburgh and Cleveland areas, attempted to withdraw $600,000 in cash from his bank. The bank was not able to meet that withdrawal request without notice, and ended up needing more than seven weeks to obtain the huge amount of cash and arrange the withdrawal.

This lengthy period of notice allowed the bank to investigate whether the elderly customer might be at risk of fraud, to offer the customer a more prudent and secure means of obtaining his money, and finally, to take steps to protect the customer, the bank, and its staff on the day of the withdrawal. Tellers were briefed on how to handle the withdrawal, and two bank security officers plus two city police officers were on hand to escort the customer and his cash to his car.