Why Do Savings Accounts Only Allow 6 Withdrawals Per Statement Cycle?

5 comments

Did you know your savings account has a limit on the amount of withdrawals you can make in a statement cycle (usually 4 weeks)?

This often hidden fact can be a surprise to some when they reach their 7th withdrawal in a month and get dinged with a $10 fee and a tisk-tisk e-mail from their bank.

So what’s the deal with this restriction? What do banks gain and what exactly is considered a withdrawal?

The good news is that deposits to a savings account are unlimited, but any withdrawal from the account is considered a transaction. This includes transferring within different savings accounts or transferring to a linked account.

Each savings account receives 6 transaction per billing cycle and the 7th transaction results in a fee. If the transactions keep occurring, the bank may even shut down your account.

The Actual Rule

According to Ally’s site: “The limit is actually set by federal law for electronic and telephone transactions from all U.S. savings and money market accounts.”

The legislation for the 6 transaction limit rule is referred to as Federal Reserve board Regulation D.

In layman’s terms: your bank doesn’t need to legally keep any of your savings account money in reserve. They can loan it out and because you can only make 6 transactions per statement cycle, they can be pretty sure that at least some of your money will remain in the account in case they need to tap your funds. The rule is a little confusing, but it makes sense from a business standpoint.

If you’ve read FF you know why I’m pro-online savings account so here’s the fees for online banks if you break this rule:

Online bank’s fee for each transaction after 6 in a billing cycle:

Ally: $10

ING: No fee, but may close account if withdrawals continue

Everbank: $10

FNBO Direct: No fee, but may close account if withdrawals continue

WT Direct: $10

HSBC: No fee, but if the transaction limits are exceeded for any 3 months during any twelve 12 month period, the Bank may be required to close the account or the account type be changed.

Emigrant Direct:No fee, but if you exceed the limit of six withdrawals for several months, your account will be closed.

Has any one ever had a problem with this rule with their bank?

Photo: CarbonNYC

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5 Comments

  1. Ravenwitch says:

    Thank you so much for this info. I was one of those taken by surprise by this situation. I’m so frustrated about it!:( My bank also waited over a month before doing this to me. Definitely a lesson learned.

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  2. Dawn says:

    This just happened to me!! I put a large sum of money into a savings account for home improvements and when I need to pay a contractor, I just transferred the money from savings to checking. I am seeing red I am so mad!!!!! I checked all my disclosures from when I opened this account and it doesn’t disclose this. Needless to say, as soon as all the contractors are paid, that account is getting closed!!!!!!

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  3. Michael says:

    so does the 6 limit reset after every 4 weeks or every time i get a bank statement?

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    Austin Reply:

    I think it’s every time you get a bank statement, but send a quick email to your bank and they’ll be able to get you exact information.

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  4. Renee says:

    Be very careful to check your Saving’s Account Billing Statement PERIOD. I thought mine was similiar to my regular checking account statemetns- monthly. Oh no, indeed the savings account statements are written around a 3 month period. SO, this means that in any STATEMENT period, in my case 3 months, if I withdraw more than 6 times in 3 months, I generate a fee. My bank , Bank of America charged $9. So basically I have to average only 2 withdrawals a month. I may just keep my savings under my mattress. The mentality of the FED (aren’t they so nice to worry about the banks) is that if you are using your savings account ‘too often’ then it should be converted into a checking account. All this so the banks get more fees. NICE.

    [Reply]

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