Discover the expert in you.
Savings Account Withdrawal Restrictions
By Ciaran John, eHow Contributor
Savings accounts are interest-bearing accounts that you can open at banks and credit unions. Unlike checking accounts, savings accounts have withdrawal restrictions. The Federal Reserve imposes limits on the number of withdrawals you can take from your savings account each month. Financial institutions are required to comply with the Federal Reserve's rules limiting withdrawals, but many institutions place further limits on withdrawals, which means some savings accounts allow minimal withdrawals.
Federal Regulation D limits withdrawals from all kinds of transactional savings accounts, including money market savings accounts. Generally, you can make no more than six withdrawals from a savings account during a bank statement cycle. Statement cycles generally last for between four weeks and a month. The types of withdrawals limited by Regulation D include check withdrawals, debit card withdrawals, automatic transfers, account transfers initiated over the Internet or telephone and withdrawals made using bank drafts.
Regulation D Exceptions
Withdrawals made in branches are unlimited as are withdrawals made at automated-teller-machines. You can also transfer money from one account to another at the ATM, via the mail or in-person at your financial institution without restriction. Regulation D does not place limitations on withdrawals made to make loan payments and other charges paid to the same institution that holds the savings account. Withdrawals unregulated by Regulation D are "non-covered" withdrawals.
Banks have to keep money on hand to pay interest to savings account holders. The financial world rewards investors with higher returns when they sacrifice a degree of liquidity. Consequently, some banks limit savings withdrawals to just one withdrawal per month in order to encourage account holders to leave funds at the bank. Accounts with these kinds of withdrawal limits usually pay better rates of return than accounts that allow the maximum number of withdrawal permissible under Regulation D.
When you exceed your withdrawal limit, your bank can assess a penalty fee. If you exceed the maximum number of withdrawals allowed under Regulation D, your bank normally sends out a notice informing you that you have violated Regulation D. If you exceed the Regulation D withdrawal limit several times, your bank has to close your savings account or change it into a non-interest-bearing checking account. If you use your savings account for overdraft protection on your checking, excess transfers to cover overdrafts count toward the Regulation D limit. Many people fall foul of Regulation D because of establishing overdraft protection in the form of a savings account.