Nosystem Images/Getty Images
Key takeout
-
Rule D previously limited withdrawals from savings and money market accounts to six per statement cycle.
-
The Federal Reserve suspended this restrictions during the coronavirus pandemic in April 2020, providing greater financial flexibility.
-
Many banks still maintain withdrawal restrictions, even though the federal government no longer needs to do so.
-
Understanding your bank’s current policies will help you avoid unexpected charges and choose the account that suits your needs.
Banks have historically limited the number of transactions that customers can make on their savings and money market accounts each month, but changes to rules during the pandemic era have made funds more accessible now.
Regulation D, or Reg. D is the Federal Reserve Rules that previously restricted withdrawals and moved into each statement cycle. The Fed revised its rules in 2020, but many banks maintain a limit of six transports, while others increase the number of allowable withdrawals and transfers.
What is Regulation d?
According to the Federal Reserve, Regulation D has imposed reserve requirements for bank deposits and other liabilities to support the implementation of monetary policy. In April 2020, bank reserve requirements were reduced to zero percent, which has been around for over five years.
More importantly, for consumers, reg. D previously limited the frequency of certain types of withdrawals and transfers, but was able to be created from a savings account during the statement cycle. Banks no longer need to limit the number of certain withdrawals from savings accounts to six, but most of the time they limit withdrawals for these accounts.
The regulations distinguished between different types of accounts based on their intended purpose. A checking account is designated as a transactional account under reg. D means it is designed to carry out daily business such as paying for buildings and purchasing. Savings and Money Market accounts are categorized as non-transactional accounts that are primarily intended to save money rather than frequent transactions.
How has Regulation D changed?
In April 2020, as Americans began navigating economic fallout from the coronavirus pandemic, the Fed removed the six-transaction limit from the definition of savings accounts via interim final rules. This change was made to increase financial flexibility for consumers during uncertain times.
Some banks quickly accepted changes to the rules by eliminating withdrawal restrictions entirely. For example, American Express National Bank previously allowed nine withdrawals per statement cycle, but now there is no withdrawal limit on savings accounts.
The type of transaction affected by reg. d
Understanding which transactions count towards withdrawal limits can help you manage your account more effectively and avoid unexpected charges.
Transactions that were historically restricted under registration. d Include:
- Electronic Transfer Pay online bills, automatic transfer between accounts, transfer via mobile banking apps, and more.
- Outgoing wire transfer From a savings account to another bank or individual.
- Buying a debit card Money Market Account (savings accounts rarely offer debit cards).
- Automatic payments Set up through bank bill payment services or third-party services like Zelle.
- Overdraft protection forwarding It covers overdrafts from savings accounts to checking accounts.
Transactions that normally do not count towards limits:
ATM withdrawals and face-to-face transactions with bank tellers are usually exempt from reg. Even banks maintaining D restrictions, withdrawal restrictions. This means you may need to visit ATMs or branches, but you will have access to money if necessary.
An exception to reg. D limit
Even banks that maintain withdrawal restrictions usually offer several ways to access money without a penalty.
- ATMs and Terror Transactions It remains unlimited at most institutions. You can access the branch to withdraw cash from the ATM or to talk to the teller without affecting your transaction count.
- Direct Deposits and Call Forwarding Do not count towards withdrawal restrictions. Because they add money to their accounts rather than deleting them.
- Interest payments Transactions initiated by other banks are also excluded from customer transaction restrictions.
- Transfer from accounts within the same bank to account Check with your specific bank as it may be treated differently depending on the institution’s policy.
Why can you learn about regs? d
Understanding the current bank withdrawal policy is important when it comes to shopping for savings accounts and managing existing accounts effectively.
Account selection considerations: A savings account may not be the right choice if you need frequent access to funds and if your bank maintains strict withdrawal restrictions. However, if your bank allows many or unlimited withdrawals, it may work well for your needs.
Price evasion: Many banks charge over-trading fees of $5-15 for each withdrawal beyond their limits. These charges can quickly add up and erode your interest income, especially on small balances.
Account conversion risk: Some banks will automatically convert your savings account into a checking account if you consistently exceed your trading limit. This conversion often involves a different fee structure and low interest rates.
Benefits of financial planning: Knowing your limitations will help you build your finances more effectively. You may choose to keep more money in a high-yield checking account for frequent transactions while using a savings account for your long-term goals.
When comparing accounts, you are looking for an institution that completely eliminates withdrawal restrictions, or be generous enough to suit your needs. In many cases, online banks offer more flexibility than traditional banks in the region.