Regulation D and savings account withdrawal limits – here’s what changed

While banks historically limited the number of transactions that 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, but many banks have maintained the six-transaction limit. Others have increased the number of allowable withdrawals and transfers.

What is Regulation D?

Reg. D imposed reserve requirements on a bank’s deposits and other liabilities, with the purpose of implementing monetary policy, according to the Federal Reserve. In March 2020, reserve requirements at banks were reduced to zero percent and they’ve remained at zero for more than three years.

Reg. D also 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 a savings deposit account to six, but most do still restrict withdrawals on these accounts.

How has Regulation D changed?

In April 2020 — as Americans began to navigate the economic fallout from the coronavirus pandemic — the Fed deleted the six certain transfer or withdrawal limits from the definition of savings deposit accounts via an interim final rule.

Some banks took the Fed up on the rule change by eliminating the withdrawal limits. American Express National Bank, for example, previously allowed nine withdrawals per statement cycle, for example. Now, it doesn’t have withdrawal limits on its savings account.

The Fed’s move was termed an interim final rule, which is issued when there’s good cause to skip issuing a proposed rule, says Scott Birrenkott, assistant director of legal at the Wisconsin Bankers Association.

Still, the proposal isn’t yet set in stone.

“The Fed still hasn’t issued a final rule,” Birrenkott says. “So, some banks are still waiting for that final piece to kind of see. I know that some banks are curious whether that might change or something might be reversed, because it can be a big step to adjust all of their policies and procedures.”

Types of transactions impacted by Reg. D

Checking accounts are designated transaction accounts under Reg. D, meaning their purpose is for conducting day-to-day business — bill paying, making purchases, etc. Reg. D places no limit on the number of transactions that can be made with checking accounts. Savings and money market accounts, known collectively as savings deposit accounts, are termed nontransaction accounts under Reg. D, meaning their purpose is for saving money.

Prior to April 24, 2020, Reg. D required banks to limit the number of transfers or withdrawals from savings deposit accounts, a term that includes both savings accounts and money market accounts, to six — and some banks still impose that limit.

Checking accounts generally don’t have withdrawal limitations because they’re meant to be used for many transactions. Savings and money market accounts, meanwhile, are traditionally meant for saving money and not for daily transactions.

Here are some examples of transactions on money market accounts and savings accounts that were limited under Reg. D:

• Withdrawals by official bank check
• Outgoing wire transfers
• Debit card purchases (likely only for money market accounts)
• Withdrawals or transfers via an automated clearing house service to pay a bill or a person or a withdrawal with a payment service such as Zelle
• Withdrawals or transfers made with a savings deposit account acting as overdraft protection for a checking account

Exceptions to Reg. D restrictions

Withdrawals at an ATM or with a bank teller are two types of exceptions to Reg. D. Even if a bank has restrictions on withdrawals or transfers during your statement cycle, these generally don’t count against your total limit.

Why it pays to know about Reg. D

It’s important to know the limits banks impose on withdrawals and transfers when shopping for a new savings or money market account. A savings account might not be the right account for you if you plan to transfer money frequently between accounts. But if the bank has many or unlimited withdrawals, then it might be the right account for you.

FAQs about Regulation D

• Will Regulation D changes result in more bank fees?

  The April 2020 changes aren’t likely to result in more bank fees.

  That’s not a trend that Bankrate is seeing. A handful of banks don’t charge fees, as of earlier this year, even if they do have a limit on the number of certain withdrawals and transfers from a savings account during a statement cycle.

  Since April 2020, more flexibility or banks not having a limit on withdrawals is a trend we’re seeing. But most savings accounts still have some limit on withdrawals during a statement cycle.

• Will Regulation D changes affect savings trends?

  The Regulation D changes from 2020 haven’t appeared to impact the personal savings rate, which is the personal saving portion of disposable personal income. Data for this can be found on the St. Louis Fed’s website.

  Even if Regulation D’s deletion of the six withdrawals or transfers rule was adopted by every bank, odds are that the restriction isn’t stopping most Americans from spending their money.

  The previous Reg. D limit related to the number of times you could withdraw money and didn’t have anything to do with the amount you could withdraw. Plus, ATM withdrawals or transactions completed with a teller weren’t previously restricted by Reg. D. So there are ways people could withdraw from a savings account as often as they’d like through certain methods, unless their bank had a more restrictive policy in place.

• Do banks restrict monthly withdrawals to less than 6?

  It’s possible for a bank to restrict the number of withdrawals to fewer than six per statement cycle. RTP Federal Credit Union, for example, is such a financial institution that limits its members to two free transfers from an RTP savings account to an RTP checking account per calendar month.

–Freelance writer Mallika Mitra contributed to updating this article.