Regulation D: Savings Account Transaction Limitations

Effective July 2, 2009, the Federal Reserve has revised Regulation D - making the savings and money market deposit accounts withdrawal and/or transfer limitation easier to understand.  Federal regulations require banks to limit the way withdrawals may be made from a savings or money market deposit account. Withdrawals in excess of these limits may result in a fee or account closure.  Customers sometimes wonder why bank accounts have different terms or pay different interest rates. One of the reasons is Regulation D:

Regulation D applies to all financial institutions.

It imposes uniform reserve requirements on transaction accounts or non-personal time deposits, defines such deposits, and requires reports to the Federal Reserve.  The regulation establishes operating parameters for each account category, such as transaction accounts (demand deposit or checking accounts) and non-transaction savings accounts. For instance, this regulation currently prohibits the payment of interest on business checking accounts.  Regulation D also places limits on the type and number of withdrawals that can be made from certain non-transaction accounts, such as savings and money market deposit accounts.  Checking accounts are deemed to be "transaction accounts", and have no such transfer or withdrawal limitations.

What accounts does it affect and how?

Savings Accounts and Money Market Deposit Accounts: During any month, you may not make more than six withdrawals or transfers to another bank account of yours or to a third party by means of a pre-authorized, automatic transfer or telephonic order or instruction, whether initiated by check, draft, debit card, if applicable, or similar order to a third party. This includes e*branch online banking account transfers and bill payments.
To help you understand these Reg. D savings account transaction limitations, and to avoid excess activity charges, please review the following information:

• Non-Limited Transactions:
  Deposits
  ATM cash withdrawals and transfers (subject to the daily amount limits and sufficient available funds)
  Withdrawals made in person, by mail, or by messenger at a University Credit Union office
  Transfers made in person at a University Credit Union office
  Automatic transfers to repay your University Credit Union loan
  
• Limited Transactions:
  Checks, point-of-sale (POS) transactions, or debit card purchases
  Automatic transfers to another deposit account at University Credit Union
  Automatic transfers to a third party or another institution
  Telephone transfers, including Automated Account Phone and those initiated by phone call, fax or e-mail through a Bank representative
  e*branch online banking transfers and Bill Payments 

In order to ensure that no more than the permitted number of withdrawals or transfers are made, the regulation requires that depository institutions take steps to prevent excessive transactions. 

Excessive Transactions: Withdrawals or transfers by mail, in person at one of our offices, and through an ATM are unlimited and are not subject to the Regulation D 6-transfer withdrawal limitation. Transfers/withdrawals in excess of the 6-transfer/withdrawal limitations as described above may be subject to a service charge.  For customers who continue to violate those limits after they have been contacted by the depository institution, the Regulation requires that either the account be closed or that the funds be transferred to a transaction account that the depositor is eligible to maintain.