Update as of 8/27
- In April of 2020, the Federal Reserve amended Regulation D (Reg D) in response to the COVID-19 pandemic. This amendment allowed banks and credit unions to let customers make more than six convenient payments/withdrawals from savings or money market accounts, all in an effort to give Americans easier access to their money during the pandemic. The Federal Reserve has indicated the change is permanent in an FAQ page. Banks and credit unions are not required to change their existing transfer limits. Check with your financial institution for any remaining restrictions or updates
“This transaction cannot be processed.” It’s the dreaded phrase you read from your banking app or online banking, but you don’t understand the reasoning, or what it is exactly. This regulation was put in place by the federal government. But what does this mean? And how can you avoid fees associated with this rule?
What is Regulation D and why does it matter?
Regulation D (Reg D) is a federal regulation that limits consumers to no more than six (6) withdrawals or transfers from savings and money market account types each month. Reg D is how the federal government ensures financial institutions have the proper amount of available cash for consumer needs. For consumers, Reg D encourages them to use savings accounts for their intended purpose, to save money.
What types of transactions does Reg D limit?
- Electronic transfers made through online or mobile banking, either at the same or different financial institution
- Automatic or pre-authorized transfers/payments (i.e. recurring transfers or bill payments)
- Check or card payments to third parties
- Overdraft protection transfers
- Phone transfers
- Wire transfers
What types of transactions are excluded, or unlimited, under Reg D?
- ATM withdrawals or transfers
- Transfers made in person at your financial institution
What if you exceed six transactions in one month?
If you do happen to go over your transaction limit or reach more than six transactions, depending on your financial institution, you may be charged a fee per transaction over the limit of six. If this becomes a monthly occurrence, a representative from your financial institution may reach out to discuss Reg D more in depth and suggest switching your savings account over to a checking account. Check with your financial institution to verify their policies on Reg D.
What if you need money after hitting the limit? What are your other options?
You’ve reached the six-transaction limit, but you still need to withdraw cash from your savings account. You can do this either in person or by using an ATM. In addition, Reg D doesn’t apply to checking accounts, so you can make unlimited number of transactions and withdrawals from those accounts.
To avoid any hassle associated with Reg D, here are some quick tips to follow:
- If you wish to make more than 6 transactions per month, visit your local branch or ATM. With these methods, there are no transaction restrictions.
- Make every transaction count, by doing fewer transactions for larger sums of money.
- Connect automatic payments to your checking account rather than your savings account. The number of withdrawals is unlimited through your checking account.
- Determine the start and end date of your statement cycle. You can use that window of time to track the number of transactions being made.
When making transactions through your savings account, just bear in mind you are limited to six per month under Reg D. The regulation is intended to help consumers save money, while also ensuring financial institutions have access to sufficient funds. Whereas, checking accounts are used for daily account management activity, payments, and transactions. Be sure to take some time and assess whether you have the right account for your financial needs.