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Be Careful Not To Exceed 6 ACH Transfers On Your Savings Account Per Month

Published 12/29/07 (Modified 3/8/11)
By MoneyBlueBook

I was routinely checking my Citibank balance online the other day when I noticed a little warning box above my account balance mentioning something about a savings account transfer limit of 6 per statement cycle imposed by a federal rule called Regulation D. I had heard about it before but never previously paid it much attention. Examining the reminder message, it was clear to me that this was something that might easily be overlooked by the average savings account holder. It's the type of important information that should be, but isn't readily advertised enough by banks. Particularly at this stage of the current ongoing economic crisis as high interest savings accounts continue to rapidly grow in popularity, it's more important than ever to be mindful of the transactional limitations of such accounts. Your money may be earning the highest interest rates at the top savings banks, but the trade off is a reduction in liquidity and access to funds.

Banks Place A Limit On The Number of ACH Transactions You May Execute Per Month

Bank savings and money market accounts are regulated by the Federal Reserve Board's Regulation D, which governs deposit accounts and their reserve requirements. The reserve percentage is the amount mandated by federal law that banks must retain in house and not loan out to customers. For savings and money market deposit accounts, Regulation D limits the number of electronic ACH transfers that one can make to 6 per statement cycle, which is about a month. While the regulation doesn't impose a reserve requirement for savings and money market accounts, it does impose about a 10% reserve requirement for checking accounts. Because checking accounts are utilized more frequently, the reserve requirement is to ensure that banks can meet demand and not run out of money. Because savings accounts are not subject to the reserve, the transaction limit helps to keep deposit withdrawals to a minimum.

In the past, before the popularity of online banks such as FNBO Direct and ING Direct, this was less of a problem since bank customers usually visited their local brick and mortar branch to request bank transfers. Now, with the growing popularity of online banks and the emergence of interest rate chasers, customers are starting to hit or exceed their ACH limit with greater regularity. Every bank enforces Regulation D requirements differently. One time violations of the monthly limit will usually result in finance charges or refusals to process the excess request, but frequent violations may cause your bank savings account to be closed and terminated, with the balance transferred to your checking account or sent to you in the form of a check.

Transactions That Count Towards the 6 ACH Transaction Limit Include:

  1. Online transfers from savings to a linked account (such as checking)
  2. Outgoing online transfers made to another bank through ACH or via online wire transfers
  3. Transfers made via phone banking
  4. Pre-authorized deductions by a third party
  5. Checks written from a money market account

However, Transactions That DO NOT Affect Your Limit Include:

  1. Transfers and deposits into a savings or money market account
  2. Withdrawals and transfers made at an ATM machine
  3. Withdrawals and transfers made in a bank branch via a teller

A Few Possible Solutions To Get Around The Limit

Because banks don't usually track and display your remaining limit for you on their websites, other than manually doing it yourself, another solution is to forgo the FDIC insurance benefits of savings accounts altogether and deposit your savings into a money market fund through a brokerage firm instead. There are usually no caps on the number of transactions you can make with money market funds, although some funds do impose minimum limits on the amount you can withdrawal at one time, as well as waiting periods for withdrawals. While money market funds are more akin to stock investments and theoretically involve a bit more risk, the interest yields are usually much higher than that offered by ordinary savings accounts. But if you want complete flexibility and liquid access to your money, perhaps you should just stick with plain old checking accounts. There are no restrictions with checking accounts, although the interest yields are usually low to none.

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14 Responses to “Be Careful Not To Exceed 6 ACH Transfers On Your Savings Account Per Month” 

  1. Christnova13 says:

    This recently happened to me and I was extremely upset. I threatened to take my banking else where to not be charged these fees.

  2. Eli says:

    I only vaguely heard about this before, and forgot it until recently I ran out of transfers. What frustrated me is they didn't warn me, and even after I used all 6 transfers, it wouldn't tell me why I couldn't transfer.

  3. Kristina says:

    Yeah, they say six times. I got a notice from the bank, and I called them to ask about it, because I had never heard of this rule before. Bank of America told me that I could only do it 3 times per payment cycle or the BANK would charge me a maintenance fee. The six time rule is a federal rule, and if I go past it, my savings will be turned into a checking. What the hell? I think it's screwed up and makes me want to raise hell, because it's just a huge inconvenience.

  4. Jennifer says:

    I'm going into my bank and raising hell! What I'd like to know is 1) Where does this fee ultimately go and 2) Who instituted this rule that penalizes me for USING MY OWN DAMN MONEY?

  5. Mr. Mad says:

    This is absurd. Here's what happened to me. Not knowing anything about the limit, I connected my savings account to my PayPal account. The reason was because my credit card payments are processed through that account, and I buy a lot of stuff online so I figured it made sense to use that account. I went on eBay and went crazy, buying about 15 different things. I then receive two letters on the same day. One for the first "violation" and one for the second. However, the day before I got the letters, I made one more purchase, constituting my third violation! I get a call from the bank saying that if I commit one more "violation" that my account would be closed.

    I've never heard anything about this - the bank never told me until I was deep in the red, and now my head is spinning.

    I have a good mind to march down to the bank and close my accounts but guess what? That wouldn't help one bit because this is a federal law and it will apply to any bank.

    I don't like it though, something's kind of fishy about it - someone has vomited in the rose bushes on this one.

  6. karen in wisconsin says:

    We recently received a letter for the HEAD OFFICE of my bank about our violating more than 6 transfers per statement period.
    Of course we are mad.
    I told hubby, we might as well keep our savings in sock under the mattress, since we make next to nothing on our savings account, and now they are going to limit our access to OUR money too?
    The sock under the mattress is sounding better all along.

  7. Fred Schultz says:

    This is just another way to be screwed by the government & and by the banks. I feel I should be able to transfer as much money from my savings to my checking account as many times as I want per month. It's MY money.

  8. kay in tn says:

    another reason why I didn't vote for Democrats - just one more tactic to control people so that we do not have to think for ourselves. this country did not become what it is by people becoming robots.

  9. Rob says:

    Wtf. I do buy a lot of things and driving to the bank is very inconvenient then going online and transferring money there. I didn't even get a notice from my bank or my app on my iPhone. The very next day my money is gone $0 from my savings and all into my checking. Wtf. It's my damn money! Now I want to raise hell to the poor nice lady at the bank who breaks her back with a smile about this bull****.

  10. L.Meade says:

    This isn't over-regulation, it's what happens when capitalists own the government. This law works in favour of the banks because it allows them to charge a fee (which they keep - the regulation does not require a fee, only that the account be changed to a different type of account). They own you and the government you think you elected. Democrats didn't do this - this is Big-Money, and that means Republicans. They don't want you educated, they don't want you to tell them they have to give money to the poor. The supposed reason for this law is to prevent people with big accounts manipulating their own interest rates. What really happens is people who are barely getting by have to transfer savings to chequing to prevent overdraft fees then have to pay a penalty when they exceed 6 transactions. It's all about the banks making money from your money that they didn't earn.

  11. TL says:

    L.Meade: It IS over-regulation. It may not have been the Democrats (although it may have been), but it is most certainly over-regulation. The fact that the banks may benefit from it, doesn't mean it isn't regulation. Those two are not mutually exclusive. It isn't Capitalism's fault either. The government has too much power and that power is for sale. This is Crony Capitalism which couldn't exist in a free market with limited government that has no power to sell to the corporations.

  12. Megan R. says:

    I can't even express how FURIOUS I am over this. I have a credit card, checking account and savings account through the SAME bank which I WAS loyal to. I pay all of my bills on time and I micromanage all of these accounts. Before opening these accounts I read every line of every contract that I signed and NOWHERE did it say that I can be charged $5 for this "regulation D" Bullshit. This morning when I went to view my online statement I was pleasantly surprised to find out that the credit card, which I payed off 4 times already was not payed yet. So I looked through my transfers and not only noticed that I payed $40 in fees AND lost ALL of the money that DID NOT transfer to my credit card. Now my credit card payment is overdue eventhough I payed it over 2 weeks ago and since I lost all of that money I don't have enough to pay it off now. I am going to my bank and raising Holy He// when I get there because I want my $1000 AND credit back.

  13. Dump Savings to Checking says:

    This is ridiculous. I just maxed out on my 6 transaction limit per month for moving funds from my savings to my checking account. I generally keep most of my funds in savings and then move them into checking when I need them as a safe and manageable method of tracking and isolating the purpose of my funds. Now, I can't pay my bills online because of this stupid regulation. I'm going to have to pull out half or all of my funds out of Savings...this was one stupid regulation.

  14. Jamie says:

    I don't feel bad for customers who threaten to close their accounts or get penalized. That's absolute nonsense that you weren't "told about it," because banks are required to provide this in their Truth in Savings disclosure. It's not the banks' fault you're all illiterate.

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