What Is the Federal Reserve Board Regulation D?

The Federal Reserve Board Regulation D sets reserve requirements for financial institutions. This is a monetary policy tool that also previously imposed a six-per-month withdrawal limit on savings accounts. This limit was lifted in 2020 amid the COVID-19 pandemic, as well, reserve requirement ratios were set to zero percent. The Fed has advised that it has no plans to re-impose the withdrawal limit.

How the Fed Regulation D Works

The Fed Reg D restricted withdrawals or transfers from savings accounts to six per month. The same rule applied to money market accounts. Although the Fed has removed those limits, some banks still impose such limits—and the number of allowed withdrawals can vary from bank to bank

The Federal Reserve Board is an independent government agency. Its seven members are in charge of the U.S. Federal Reserve system, which tries to keep the U.S. economy growing and the financial system stable.

The Fed Reg D also governs the reserve requirements of depository institutions. Bank reserves are currency deposits that depository institutions keep on hand and do not lend out. This regulation helps the central bank when it comes time to implement its monetary policy. Reserve ratios were set to 0% during the pandemic.

A depository institution is a place where people keep their money. We often refer to these institutions as commercial banks, savings institutions, or credit unions. These organizations hold your money safely until you need it back. They may pay you interest while holding your money. They may also lend it out to other customers in a way that doesn’t prevent you from accessing your money when you need it.

Regulation D and Bank Reserves

Financial institutions satisfy their reserve requirements in two ways. The first is by maintaining a certain amount of money in their own vaults. The second is by keeping a balance at their district’s Federal Reserve Bank. A financial institution that fails to meet its reserve requirements may have to pay a reserve deficiency charge to its Federal Reserve Bank. This charge costs one percentage point above the primary credit rate that was borrowed.

Regulation D ensures that banks have enough cash on hand to meet withdrawal requests by limiting how customers are able to use their savings accounts. Although institutions aren’t required to keep any reserves for customers’ savings account balances, they must keep reserves for transaction accounts—in other words, checking accounts.

What Transactions Might Be Limited

Although the withdrawal limit of Regulation D is no longer in place, your bank may still limit certain transactions, such as:

• Overdraft transfes
• Electronic funds transfers (EFTs)
• Automated clearing house (ACH) transfers
• Transfers made by phone, fax, computer, or mobile device
• Wire transfers made by phone, fax, computer, or mobile device
• Checks written to a third party
• Debit card transactions

Getting Around Limits

You can get around this transaction limits still imposed by banks by making certain transfers and withdrawals. These are considered inconvenient transactions. Usually, if you use an ATM or a bank teller to move your money, no limits or fees apply.

That said, some banks have stricter rules that don’t exempt certain transactions. You’ll have to read the terms and conditions of your account or ask customer service to see what rules apply to your specific account.

How to Avoid Withdrawal Problems

Here are five strategies to keep your savings account withdrawals below the maximum and deal with your bank if there’s an exception.

1. Limit withdrawals to non-monthly bills. You might set aside money each month to pay bills that only come up a few times a year, like homeowners insurance or car repairs.
2. Lump withdrawals. Ideally, you keep a budget that you adjust at the beginning of each month to account for that month’s anticipated income and expenses. At the beginning of each month, make your best estimate of how much you might need to withdraw from savings. Or perhaps your income comes from an irregular source and you set money aside in months when you make more money, then dip into savings in months when your income is low. Instead of making several savings withdrawals or transfers throughout the month, try to make just one or two.
3. Pay bills from your checking account. Don’t use your savings account for this purpose.
4. Avoid overdrawing your checking account. Set up mobile alerts that keep you on top of your balance.
5. Contact your bank in advance. If you might need to make a seventh transaction from savings, ask how to avoid penalties and fees. Specifically, ask if making an ATM, in-person, or phone-to-check transfer (as described in the section above) will keep you out of trouble.

Withdrawal Policies at Top Banks

While Regulation D provides minimum standards that banks must follow, banks can implement tighter criteria to determine when to charge customers for exceeding the six-transaction limit. Here are the policies of three of the countries’ biggest banks.

Chase

Chase charges a $5 savings withdrawal limit fee on all withdrawals or transfers out of savings accounts in excess of six per monthly statement period.

Bank of America

Bank of America charges $10 for each withdrawal or transfer in excess of six per monthly statement cycle.

Wells Fargo

Wells Fargo has certain accounts that allow for unlimited transfers.

The Bottom Line

If you are a customer who uses your savings account as intended—mostly to make deposits and accumulate funds, you’re likely safe from limits that banks still impose. You can avoid excess transaction fees by making most of your outgoing transfer and withdrawals from your checking account, not your savings account.