What Happens if You Exceed Regulation D?
Regulation D, a federal rule, regulates how banks and credit unions manage savings deposits. Until April 24, 2020, the Federal Reserve’s regulation limited the number of withdrawals you could make from a “savings deposit” account, which included both savings accounts and money market accounts.
Monthly Limit
Regulation D limited savings accounts and money market accounts to six “convenient” transfers or withdrawals per month. These included:
Key Facts
- Monthly Limit: Regulation D limits savings accounts and money market accounts to six “convenient” transfers or withdrawals per month.
- Consequences: If you exceed the monthly limit, you may face the following consequences:
- Fees: Your bank may charge you fees for each excess withdrawal.
- Account Closure: Your bank may choose to close your savings account.
- Transaction Denial: Your bank may deny any additional transactions that exceed the limit.
- Pandemic-Era Rule Change: In April 2020, the Federal Reserve Board made changes to Regulation D to make it easier for people to access their savings deposits without penalty during the COVID-19 pandemic.
- Bank Policies Vary: While some banks and credit unions dropped their fees for excess withdrawals, others have kept their pre-COVID-19 penalties in place.
- Current Status: As of now, the Federal Reserve has suspended Regulation D indefinitely and does not have plans to re-impose transfer limits.
- Bank-Specific Policies: Despite the suspension of Regulation D, many banks still enforce the six-withdrawal limit. It is important to review your savings account disclosure or contact your bank to understand their specific policies and any applicable fees.
- Automated Clearing House (ACH) payments and electronic funds transfers (EFTs)
- Bill payments deducted directly from your savings account
- Debit card transactions
- Overdraft transfers (where you link your savings account to a checking account as a backup for overdrafts)
- Transfers made by computer, mobile device, or phone
- Checks written to a third party
- Wire transfers
Consequences
If you exceeded the monthly limit, you may face the following consequences:
- FeesYour bank may charge you fees for each excess withdrawal.
- Account ClosureYour bank may choose to close your savings account.
- Transaction DenialYour bank may deny any additional transactions that exceed the limit.
Pandemic-Era Rule Change
In April 2020, the Federal Reserve Board made changes to Regulation D to make it easier for people to access their savings deposits without penalty during the COVID-19 pandemic.
Bank Policies Vary
While some banks and credit unions dropped their fees for excess withdrawals, others have kept their pre-COVID-19 penalties in place.
Current Status
As of now, the Federal Reserve has suspended Regulation D indefinitely and does not have plans to re-impose transfer limits.
Bank-Specific Policies
Despite the suspension of Regulation D, many banks still enforce the six-withdrawal limit. It is important to review your savings account disclosure or contact your bank to understand their specific policies and any applicable fees.
Conclusion
Exceeding Regulation D can result in fees, account closure, or transaction denial. However, the Federal Reserve has suspended Regulation D indefinitely, giving banks more flexibility in managing savings accounts. It is still important to check with your bank for their specific policies regarding excess withdrawals.
References
- Regulation D | Credit Karma
- What Is Regulation D In Banking? And What’s Changed For Your Savings Account?
- Regulation D And Savings Account Withdrawal Limits – Here’s What Changed | Bankrate
FAQs
What is Regulation D?
Regulation D is a federal rule that regulates how banks and credit unions manage savings deposits.
What are the consequences of exceeding Regulation D?
Consequences may include fees, account closure, or transaction denial.
Has Regulation D been suspended?
Yes, the Federal Reserve has suspended Regulation D indefinitely.
Do banks still enforce Regulation D?
Some banks still enforce the six-withdrawal limit, despite the suspension of Regulation D.
How can I find out if my bank enforces Regulation D?
Review your savings account disclosure or contact your bank.
What should I do if I need to make more than six withdrawals per month?
Contact your bank to discuss your options. Some banks may allow you to make additional withdrawals without penalty.
What are some alternatives to exceeding Regulation D?
Consider using a checking account or withdrawing cash using a “non-convenient” method, such as an ATM or branch.
Is it advisable to exceed Regulation D?
It is generally not advisable to exceed Regulation D, as it may result in fees or other penalties. However, the suspension of Regulation D provides more flexibility for account holders.