Federal law limits you to six monthly savings transfers or withdrawals. Using an ATM or teller helps skirt the limit.
Savings accounts are an easy place to stash your cash, but a federal rule called Regulation D puts limits on some withdrawals.
Regulation D and why it matters
The federal rule, also known as Reg D, comes from the Federal Reserve Board and puts a limit of six transactions per month on certain transfers and withdrawals from your savings or money market account.
Regulation D is the federal government’s way of ensuring that financial institutions have the proper amount of reserves on hand and encouraging people to use savings accounts as they are intended: to save money.
If you go over the limit, the bank or credit union can charge you a fee, close your account or convert it into a checking account. The law doesn’t apply to checking accounts, so they do not have the same withdrawals restrictions.
Which transactions are limited under Reg D?
These kinds of transactions in savings or money market accounts fall under the rule:
- Online transfers from those accounts to a different account either at the same institution or a different one
- Transfers processed over the phone
- Automatic or preauthorized transfers, such as bill payments or any other recurring transfers
- Overdraft transfers from your savings account to your checking account.
- Transfers made by check or debit card
Which transactions don’t apply to the savings account withdrawal limit?
The following don’t count toward the six-transaction limit:
- Withdrawals or transfers made at ATMs
- Transactions made in person at a bank
- Withdrawals made by telephone if the check is mailed to the depositor
What if I go over the limit?
The consequences of going over the Reg D limit depend on your financial institution. Some financial institutions charge a withdrawal limit fee or an excessive use fee, which typically can range from $2 to $15.
What if I need cash after I hit the limit?
If you need to access cash from your savings account after reaching the six-transaction limit, use one of the methods not limited by Reg D. That includes using ATMs, withdrawing money in person at a branch or having a check mailed to you.
Quick tips on avoiding Reg D fees
If you’ve been penalized for going over the limit or want to make sure you never hit it, keep these things in mind:
- Make transfers count; do fewer transfers with larger sums of money
- Link any automatic transfers, such as bill payments, to your checking account instead of savings. Checking accounts don’t have limits on the number of withdrawals.
- If you hit the transaction limit and need to make another transfer or withdrawal from your savings account, do it at an ATM or a bank. Even if your institution charges a fee, you won’t risk your account being closed or converted to a checking account.
- If your checking account has overdraft protection linked to a savings account, try to avoid overdrafts, which would be counted under the six-transaction Reg D limit. Set up low-balance alerts on your checking account and curb your spending if your balance edges to zero to avoid triggering automatic transfers from your savings to checking account.
- Set up overdraft protection to pull from your credit card instead of your savings account.