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Regulation D, And Its Effect On Saving Account Transfer Limits

Amelia Smith
Amelia Smith
Amelia Smith is a financial writing specialist with a wealth of experience in creating technical financial content and persuasive sales pages. With her expertise in financial storytelling, she has helped numerous businesses and organizations expand their reach and achieve their growth objectives.

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Table of Contents

Regulation D, also known as Reg D, is a federal regulation that limits the number of certain types of transactions that can be made from savings accounts each month. The rule limited the number of withdrawals you could make from a savings deposit account, including savings accounts and money market accounts. In 2020, that limit was removed because the Fed determined reserves were sufficient to no longer warrant restrictions on the number of monthly withdrawals.

What Transactions Counted Toward The Limit?

Regulation D required savings accounts to be limited to a total of six “convenient transfers and withdrawals” per month. These included:

  • Automated Clearing House (ACH) payments
  • Electronic funds transfers (EFTs)
  • Debit card transactions
  • Overdraft transfers (the process of linking a savings account to a checking account to cover overdrafts)
  • Transfers made by mobile device, phone, or computer
  • Checks written to a third party
  • Wire transfers
  • Bill payments if deducted directly from your savings account

You could make unlimited withdrawals from an ATM or in person at a bank, as those transactions were not considered “convenient.”

However, as part of the federal government’s financial response to the Covid-19 crisis, the Fed introduced changes to Regulation D, so people could dip into their savings more frequently without penalty.

Do You Need To Worry About Regulation D?

Even though Regulation D has been suspended on a federal level, it is still important to be aware of it since several banks still have the same withdrawal limits in place.

You might worry if the changes to Regulation D will result in new or increased bank fees. However, the guidance from the Fed does not impact whether banks can charge fees for excessive withdrawals from savings accounts. While banks were encouraged to waive fees for additional withdrawals, they were not obligated to modify their existing policies. If your bank was already charging excess withdrawal fees, it will probably continue to do so.

Alternatives To Saving Accounts

There are alternative options to consider if you prefer not to deal with Regulation D.

  • Digital bank accounts have higher interest rates and bigger transaction limits than regular savings accounts, so try a company like Ally Bank, Chime, or Simple.
  • Money market accounts offer more substantial returns than standard bank accounts and usually have higher transaction limits too, but require a larger opening balance and upkeep.
  • Certificates of Deposit (CDs) are a type of savings account that generally offer higher interest rates than traditional accounts. You must invest a fixed amount of money for a designated duration, with longer terms typically resulting in better returns.
  • High-yield savings accounts provide increased interest rates than the average savings account and may have elevated transaction limits as well. Many banks offer tiered interest rates determined by the amount held in your account, meaning you can gain even more by maintaining a larger balance.

Delve deeper: Take a look at our guide on how to open a savings account.

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