Are you one of those people who out of convenience in the middle of the night hit the transfer between accounts button on your computer and move the money instantly from your “savings deposit” to your checking account to keep from getting charged overdraft or insufficient funds fees? Well, you may be setting yourself up and risking your savings.
When you are budgeting your funds, I know I am always balancing my accounts to meet my budgetary needs. My bank now posts the following reminder on the page where I can move money from my savings to my checking account:
Reminder: In accordance with federal regulations, if you exceed six (6) transfers/withdrawals from your savings or money market accounts during each monthly statement cycle, you will incur a fee for each transaction thereafter. No fee will be assessed for teller or ATM transactions. See your Deposit Account Agreement for details.
Why the Limit – It Is YOUR Money?
Well, your account is categorized as a “savings deposit”. The Federal Reserve requires banks to keep money in their vaults to cover different accounts – this is where it tends to get sticky and hard to follow. The rules are reviewed annually and updated based on what the Reserve is hoping to accomplish. This all falls under the code of what is known in the finance world of banking as “Reg D”.
WHAT is “Reg D”?
This is the section of the rules under the definition of the so-called “Savings Accounts” under the Federal Reserve Board. The portion of these rules concerning the limitations that are set upon the holders of these accounts falls under Section 204.2(d)(2) and gives your financial institution the authority to fine you for going over this limit every month.
Can You Skirt Around this Limit? YES!!
Instead of making several smaller transfers throughout the month as they become needed – make only a couple of larger ones.
This limit is only for those transfers or withdrawals made out of convenience. But using a less convenient method of moving money does not count against the limitation per month. We still can get FREE UNLIMITED withdrawals and transfers if they are made through the mail, in person, at the ATM or by phone. These are considered non-convenient and will go against you towards the limit.
So, it makes more sense to physically get in your car and withdraw the funds from your ATM, then deposit them back into your checking account.
Will I Be Penalized for Going Over the Limit?
Yes, your bank has every right. The fee gets your attention and alerts you so you can do things differently.
If you go over your transfer/withdrawal limit by using convenient methods all the time, your account is no longer thought of as a “savings deposit” and in the financial world and it becomes a “transaction account”.
The fee they assess your accounts for going over is much easier to do, and they hope you will learn from the experience so they won’t have to keep adding fees.
So next time you see your checking account getting close to depletion, take an extra few moments and stop by your bank to physically move the money and keep yourself out of the 6 limit count. Remember, we don’t want to have to budget for unnecessary added fees if we don’t have to.
So now that you are wiser and informed – please leave a comment on your experiences and if this article has helped you rethink and change your ways.