What It Is, Limits on Withdrawals

What Is Federal Reserve Regulation D?

Regulation D is a Federal Reserve rule created to ensure banks and credit unions have enough cash reserves, and it sets requirements for savings and money market accounts.

Here’s how it impacts consumers: To encourage people to save money, the regulation imposed a limit of six withdrawals or transfers per month from savings accounts. Financial institutions could impose fees or account restrictions for customers who exceeded the limit. In 2020, the Fed imposed an interim rule that removed the requirement for financial institutions to limit consumers’ savings withdrawals. Despite the rule’s suspension, some banks and credit unions still enforce the monthly limit.

How Regulation D Worked

The Federal Reserve put Regulation D in place to implement monetary policy.

One way it sought to ensure adequate levels of reserves at financial institutions was to limit withdrawals and transfers from savings accounts. The rule does not limit all types of transactions; it focuses on those considered to be “convenient” transactions, and those include bill pay services, writing a check, using a debit card, overdraft transfers, and money transfers completed by phone, fax, or online.

Bank checks and withdrawals or transfers made inside a bank or at an ATM did not count toward the monthly limit.

The rule applied to savings-related accounts and does not limit checking accounts, which are transaction-oriented (intended for tasks such as paying bills and making purchases).

Changes in Regulation D

In April 2020, the Federal Reserve announced that it was no longer requiring financial institutions to enforce that limit. Its rationale was to give consumers greater access to their cash during the coronavirus pandemic and the related economic impact. However, the interim rule did not forbid financial institutions from maintaining the withdrawal limits, and some banks and credit unions continue to enforce the monthly caps.

Which Transactions Are Limited by Banks?

The rule covers these transaction types for savings and money market accounts:

• Online transfers
• Phone or fax transfers
• Overdraft transfers to a checking account
• Debit card transactions
• Check transactions
• Automated transfers such as recurring withdrawals or bill pay

Some banks and credit unions don’t limit the number of these transactions a customer can make per month. For example, Citibank does not limit the number of withdrawals or check transactions you can make from a savings account.

Other financial institutions may limit the number of these transactions a customer can make in a month, or there may be a set number for free before a fee is charged for additional withdrawals. Truist, for instance, imposes a $5 fee for each withdrawal over the monthly limit from savings or money market accounts.

The Bottom Line

Some banks and credit unions enforce a monthly six-transaction limit on savings or money market accounts. Contact your financial institution or check your account details to see if you are subject to any limits and to understand any related fees.

Consider using account alerts to track your withdrawals and your balance, which may help reduce the need for overdraft transfers. Another option is to move some recurring payments to your checking account if you have one, as that is a more transaction-oriented account type and is not subject to the same limits.