Do Savings Accounts Have Withdrawal Limits?

Yes, but the Federal Reserve has changed the rules

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Savings accounts are great tools to keep you ready for life’s surprising moments. Your money works harder for you in a savings account than in a checking account, often bearing higher interest rates. However, money in savings accounts isn’t meant to be as accessible as money in checking accounts. Because of that, some banks and credit unions impose withdrawal limits.

For many years, a federal rule called “Regulation D” limited you to six savings-account withdrawals per month. However, Regulation D’s (Reg D) withdrawal limit is no longer in force.

Key Takeaways

  • Until 2020, Regulation D limited account holders to six withdrawals from a savings account per month without facing penalties or fees.
  • The Federal Reserve has no plans to reinstate Reg D’s withdrawal limit.
  • Banks are the ultimate decision-makers in pausing withdrawal limits, so it may still be in effect at some institutions.

Federally-Regulated Withdrawal Limits Have Been Indefinitely Suspended

Reg D is a federal rule meant to ensure that banks have enough money to do business. Part of this regulation includes limiting savings account withdrawals to six per month. Any withdrawals more than that amount meant you often had to pay a fee to your bank.

The Federal Reserve indefinitely suspended Regulation D’s withdrawal limit in April 2020 to give you more access to your funds due to increasing financial burdens.

When Reg D’s withdrawal limit was in effect, each financial institution set penalties for overdrawing. Those penalties could be as high as $10 per withdrawal above six, and some banks required you to convert your savings account to a checking account.

Although Reg D’s withdrawal limit is no longer in effect, banks still have the authority to set limits on savings account withdrawals. Your bank may still have the six-withdrawal limit and charge a fee if you go over the limit.

Why and How Regulation D Limited Savings Account Withdrawals

Regulation D was established to regulate how much money banks need to have on hand in three different types of accounts, one of which is a savings account. Banks use funds from savings accounts to do business, such as granting home mortgages or consumer loans. As a result, banks only hold a small portion of their customers' deposits.

Although financial institutions use your funds for their purposes, the Federal Deposit Insurance Corporation (FDIC) protects your money up to $250,000 per account holder per bank.

Under Regulation D, you were allowed to make six “convenient” transfers or withdrawals without penalty. Convenient transfers and withdrawals include:

  • ACH transfers
  • Overdraft transfers
  • Online and mobile transfers
  • Debit card transactions
  • Transfers made by phone
  • Bill pay transfers

The Fed notes that it has no plans to reinstate Reg D’s six-withdrawal limit.

Exceptions To Regulation D Limits

Certain savings account transactions aren’t subject to Reg D’s withdrawal limit. These include:

  • ATM or mail withdrawals or transfers
  • Withdrawals or transfers you do in person with a teller
  • When you call your bank and ask for a withdrawal by check

ATM Withdrawal Limits

Your bank may impose withdrawal limits on the ATM withdrawals you make. These limits may be different from Regulation D standards. For example, some banks may limit how much money you can get in one day or from a single withdrawal. These limits may be based on the account type, available funds in the account, the ATM’s available funds, and in some cases, how long you’ve been a customer of the bank.

Frequently Asked Questions (FAQs)

How do you make a withdrawal from a savings account?

There are multiple ways you can make a savings account withdrawal. You can do so electronically, over the phone, in person, or at an ATM. Some withdrawal types count against your bank’s withdrawal limit (if it has one) and some won’t, such as in-person withdrawals at a bank branch.

How do you close a savings account?

You can close your savings account by calling your bank or visiting a branch. Ensure the account has no pending or outstanding items that could delay the process. Also, it’s quicker to close with a positive or zero dollar balance. You can transfer the balance to another account or have the bank send you a check.

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Article Sources

  1. Code of Federal Regulations. "Part 204 - Reserve Requirements of Depository Institutions (Regulation D)."

  2. Board of Governors of the Federal Reserve System. “Compliance Guide to Small Entities Regulation D: Reserve Requirements of Depository Institutions.”

  3. Board of Governors of the Federal Reserve System. “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.”

  4. Board of Governors of the Federal Reserve System. “Savings Deposits Frequently Asked Questions,” See number 4.

  5. Federal Deposit Insurance Corporation. “Deposit Insurance: Your Insured Deposits.”

  6. Board of Governors of the Federal Reserve System. “Savings Deposits Frequently Asked Questions,” See number 3.