Ever wondered why there’s sometimes a limit to the number of free transfers and withdrawals you can make from your savings accounts?
It’s all connected to regulation from the Federal Reserve, known as Regulation D, or Reg D.
The measure, which affects all banks and credit unions, helps ensure financial institutions have the proper amount of available cash for consumer needs, said Katie Shemak, deposit operations manager at Dupaco Community Credit Union.
How it impacts you
But the regulation also affects you, the saver.
“The savings accounts are really meant for saving, and Reg D helps encourage that, as we don’t classify savings accounts as transaction accounts,” Shemak said.
Once that monthly limit is reached, financial institutions can reject transaction requests, impose an excessive transfer fee, convert the account to a checking account or even close the account.
At Dupaco, a $3 excessive transfer fee is imposed for each subsequent Regulation D transfer or withdrawal from that savings account.
When Regulation D fees come into play
Savings account transactions that are limited to six each month include those made using:
- Shine Online and Mobile Banking.
- Dupaco’s Presto Telephone Teller, a free voice response system that allows you to access your accounts any time by calling (800) 373-7600.
- Telephone transfers.
- Telephone requests for check withdrawals.
- Pre-authorized withdrawals, including automatic bill payments.
- Overdraft transfers used to cover shortages in a checking account.
When the transactions are fee-free
Not all transfers and withdrawals from your savings accounts fall under these federal guidelines, though. Transactions that don’t count against your allotted six include:
- Transfers for loan payments.
- ATM withdrawals, including ATM cash withdrawals from your savings account.
- In-person transactions at a Dupaco branch or CO-OP Shared Branch.
How you can avoid savings transfer and withdrawal fees
But you can take steps to avoid excessive transfer fees. Shemak explains how:
1. Review your budget.
A free Dupaco Money Makeover can help you review your budget so you know how much money you need in each account to both cover your expenses and build your savings. By properly allocating your funds in your checking and savings accounts, you can avoid the need to transfer money from your savings accounts to cover shortages, Shemak said.
2. Use your checking account for direct deposit.
Once you’ve reviewed your budget, consider having your recurring deposits, such as your paychecks, securely direct deposited into your checking account—not your savings account. From there, you can use Dupaco’s automatic transfers to distribute your money into your other accounts, such as You-Name-It Savings or your Holiday Club account.
3. Utilize payroll distribution.
Another option: Take advantage of payroll distribution, which allows you to set up your recurring deposits to be automatically distributed to your various accounts before the funds hit your checking account.
“When the payroll comes in, we divvy it up before our members even see it in their checking accounts,” Shemak said. “Some members don’t want to see how much money they have until everything has been paid first. They just want to see what’s leftover.”
4. Try to prevent overdrafts.
Because overdraft transfers from savings accounts go against your allotted six transactions, it’s one more reason to keep close tabs on your checking account balance.
5. Use Dupaco’s eNotifier Alerts.
Make it easier to keep tabs on your accounts by activating Dupaco’s free eNotifier Alerts. You can customize them to be alerted, for example, every time you transfer money from your savings account to your checking account.
You also can log into Shine Online or Mobile Banking to review the number of transactions you’ve made from your savings accounts.
Within Shine Online Banking, you’ll also be alerted every time your transaction counts against your allotted six transfers.
6. Go to a branch or ATM.
When you need cash from your savings account, go to a Dupaco branch, CO-OP Shared Branch or ATM to avoid the monthly transaction limit.
7. Take more money than you need.
And when you do transfer or withdraw money from your savings account, consider taking more than you need to give yourself a cushion. You can always return money to your savings account later.