Can You Spend From a Savings Account?
Savings accounts are a great place to keep cash: you earn interest, and the money is accessible if you need it, but how accessible is the money in a savings account? For example:
- Can you write a check from a savings account?
- How about making online purchases with that money?
- Can you set up recurring bill payments?
The answer to those questions is generally no. Banks don't issue debit cards for savings accounts, and they rarely allow you to write checks for payments and purchases.
Why You Can't Make Payments from Savings Accounts
Savings accounts are not designed for transactions. They're meant for long-term storage of money. Because of that, federal law that sets limits for withdrawals made from savings accounts (Regulation D).
On April 24th, 2020, the Federal Reserve passed an interim rule to delete the six-per-month limit described below. As a result, customers can make unlimited withdrawals and transfers from savings accounts during the Coronavirus pandemic, but there is no official guidance on whether or not the rule will be permanent. Check with your bank if you're approaching the limit.
When you’re dealing with a checking account, you can make as many withdrawals as you want by writing a check, using your debit card, making electronic bill payments, or withdrawing funds. For a savings account, those types of payments, along with electronic payments and automatic transfers, are limited to six per month. That explains why you can’t use a debit card or write checks from savings accounts or use them for online shopping. Without limits from your bank, you’d likely run over the federal limit, and your bank gets in trouble if you do that.
Savings accounts are limited to six withdrawals or transfers per month, but there's no limit to the number of deposits you can make to them.
If you want an account that pays interest and also offers the ability to spend that money easily, you have a couple of choices: interest checking accounts and money market accounts.
Interest checking accounts are just what they sound like: checking accounts that pay interest on your cash—without the monthly transaction limit. Interest rates are often lower than what you can get in a savings account, but online interest checking accounts pay competitive rates.
Money market accounts are like souped-up savings accounts. They pay more than regular savings accounts, and you're allowed to write checks from them—you might also get a debit card for spending. Just like savings accounts, you’ve got that six-per-month limit (some banks lower the limit to three), so these accounts aren’t for everyday use. If you only need to write checks on your savings occasionally, they might meet your needs.
What You Can Do
The six-per-month rule doesn’t mean you have to make a trip to the bank to use money in your savings accounts. You get six chances to move out what you need for the month. Here are some ways to keep your cash accessible.
- Transfer to Checking: transfer what you’ll need to your checking account, and spend from that account. These types of transfers are limited to six per month unless you do them in person or at an ATM, but with a little planning, you should be able to get enough out each month. If you don’t have a checking account, then open one. Try a prepaid account if you’re unable to open a checking account at a bank or credit union.
- Get Cash: There are no federal limits on how often you withdraw cash from a savings account using an ATM or teller.
- Get a Check: if you’re not comfortable using cash, you can have the bank print a check from your savings account. If the check is payable to you (the account owner), this transaction won’t count against your monthly limit. You can also request a check payable to somebody else, but check with your bank first: If it's allowed, you'll probably need to sign forms and it will count against your six transactions.
Board of Governors of the Federal Reserve. "Federal Reserve Board Announces Interim Final Rule to Delete the Six-Per-Month Limit on Convenient Transfers From the 'Savings Deposit' Definition in Regulation D." Accessed July 3, 2020.
Board of Governors of the Federal Reserve. "Regulation D: Reserve Requirements," Page 3. Accessed July 3, 2020.
Consumer Financial Protection Bureau. "Is There a Limit on How Much I Can Deposit Into My Savings Account?" Accessed July 3, 2020.
Patelco Credit Union. "Money Market Accounts." Accessed July 3, 2020.