Regulation D And Savings Account Withdrawal Limits – Here’s What Changed

NoSystem images/Getty Images

While banks historically limited the number of transactions customers could make each month in savings and money market accounts, a pandemic-era rule change means you may now have easier access to your funds.

Regulation D, or Reg. D, is a Federal Reserve Board rule that previously limited withdrawals and transfers to six each statement cycle. The Fed revised the rule in 2020, but many banks have maintained the six-transaction limit while others have increased the number of allowable withdrawals and transfers.

What is Regulation D?

Regulation D imposed reserve requirements on banks’ deposits and other liabilities to help implement monetary policy, according to the Federal Reserve. In April 2020, reserve requirements at banks were reduced to zero percent, where they’ve remained for more than five years.

More importantly for consumers, Reg. D previously restricted the frequency of certain types of withdrawals and transfers you could make from a savings deposit account during a statement cycle. Banks no longer have to limit the number of certain withdrawals from savings deposit accounts to six, but most still restrict withdrawals on these accounts.

The regulation distinguished between different types of accounts based on their intended purpose. Checking accounts are designated as transaction accounts under Reg. D, meaning they’re designed for conducting day-to-day business like bill paying and making purchases. Savings and money market accounts are classified as nontransaction accounts, intended primarily for saving money rather than frequent transactions.

How has Regulation D changed?

In April 2020, as Americans began navigating the economic fallout from the coronavirus pandemic, the Fed deleted the six-transaction limit from the definition of savings deposit accounts via an interim final rule. This change was made to provide consumers with greater financial flexibility during uncertain times.

Some banks immediately embraced the rule change by eliminating withdrawal limits entirely. American Express National Bank, for example, previously allowed nine withdrawals per statement cycle but now places no withdrawal limits on its savings account.

Types of transactions impacted by Reg. D

Understanding which transactions count toward withdrawal limits helps you manage your accounts more effectively and avoid unexpected fees.

Transactions that were historically limited under Reg. D include:

• Electronic transfers such as online bill pay, automatic transfers between accounts and transfers via mobile banking apps.
• Outgoing wire transfers from your savings account to other banks or individuals.
• Debit card purchases on money market accounts (savings accounts rarely offer debit cards).
• Automated payments set up through your bank’s bill pay service or third-party services like Zelle.
• Overdraft protection transfers from your savings account to cover checking account overdrafts.

Transactions that typically don’t count toward limits:

ATM withdrawals and in-person transactions with bank tellers are generally exempt from Reg. D restrictions, even at banks that maintain withdrawal limits. This means you can still access your money when needed, though you may need to visit an ATM or branch.

Exceptions to Reg. D restrictions

Even banks that maintain withdrawal limits typically provide several ways to access your money without penalties.

• ATM and teller transactions remain unlimited at most institutions. You can withdraw cash at ATMs or visit a branch to speak with a teller without affecting your transaction count.
• Direct deposits and incoming transfers don’t count toward withdrawal limits since they add money to your account rather than removing it.
• Interest payments and other bank-initiated transactions are excluded from customer transaction limits.
• Account-to-account transfers within the same bank may be treated differently depending on the institution’s policies, so check with your specific bank.

Why it pays to know about Reg. D

Understanding your bank’s current withdrawal policies is crucial when shopping for savings accounts or managing your existing accounts effectively.

Account selection considerations: A savings account might not be the right choice if you need frequent access to your funds and your bank maintains strict withdrawal limits. However, if the bank allows many or unlimited withdrawals, it could work well for your needs.

Fee avoidance: Many banks charge excess transaction fees of $5-$15 for each withdrawal beyond their limit. These fees can quickly add up and erode your interest earnings, especially on smaller balances.

Account conversion risks: Some banks automatically convert savings accounts to checking accounts if you consistently exceed transaction limits. This conversion often comes with different fee structures and lower interest rates.

Financial planning benefits: Knowing your limits helps you structure your finances more effectively. You might choose to keep more money in high-yield checking accounts for frequent transactions while using savings accounts for longer-term goals.

When comparing accounts, look for institutions that either eliminate withdrawal limits entirely or make them generous enough for your needs. Online banks often offer more flexibility than traditional banks in this area.

FAQs about Regulation D

• Is Regulation D still suspended?
  

  Regulation D withdrawal limits are officially suspended at the federal level, meaning banks are not required to impose the six-transaction limit. However, this suspension was implemented as an interim rule, not a permanent change. Many banks choose to maintain their own withdrawal restrictions as internal policies, so the practical impact varies by institution.

   

• What are the requirements of Regulation D?
  

  Currently, Regulation D requires banks to maintain reserve requirements (though these are set at zero percent) and classify accounts as either transaction or nontransaction accounts. The regulation no longer mandates withdrawal limits on savings accounts, but banks can choose to impose their own restrictions as part of their account terms and conditions.

   

• What happens if I exceed transaction limits?
  

  If your bank maintains withdrawal limits and you exceed them, you’ll typically face excess transaction fees ranging from $5 to $15 per additional transaction. Some banks may also send warnings or temporarily restrict electronic access to your account. Repeated violations could result in your account being converted to a checking account or closed entirely.

   

• What can I do if I need cash after reaching the limit?
  

  If you’ve reached your monthly transaction limit, you can still access your money through ATM withdrawals or by visiting a bank branch to speak with a teller. These transactions typically don’t count toward your electronic transaction limit. You can also wait until your next statement cycle begins to resume electronic transfers.

• How can I maximize savings under Regulation D?
  

  To optimize your savings strategy, consider keeping funds you need regular access to in a high-yield checking account or money market account with generous transaction allowances. Use traditional savings accounts for longer-term goals where you won’t need frequent access. This approach helps you earn competitive rates while avoiding transaction limit issues.

• How can I avoid fees related to Regulation D?
  

  To avoid withdrawal limit fees, track your monthly transactions and plan larger, less frequent transfers when possible. Set up automatic transfers at the beginning of each month rather than making multiple smaller withdrawals. Consider using ATMs or visiting branches when you need cash, and choose banks that offer generous withdrawal allowances or eliminate limits entirely.