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How Regulation D Affects Your Savings Accounts

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

If you have a savings or money market account, you may have noticed that there’s a rule that goes with it — no more than six transfers or withdrawals per month from the account. It may feel oddly specific, but it’s true for all savings accounts at all banks and credit unions. Congratulations, you’ve experienced Regulation D.

What is Regulation D?

Regulation D refers to the Federal Reserve’s reserve requirements for depository institutions — or, more plainly, how much money a bank needs to hold in reserve as a percentage of the total amount of money it owes to its customers. So, for instance, currently banks must keep a minimum reserve of 3% of the total amount over $16.3 million and 10% of the total amount over $124.2 million.

Why is this important? “It’s designed to make sure that banks have an appropriate amount of money in reserve,” says Robert Föehl, J.D., executive-in-residence for business law and ethics at Ohio University’s College of Business. “It’s about making sure that banks are safe and sound.”

As part of these reserve requirements, banks must classify what types of deposit accounts they have and keep reserves accordingly. For accounts categorized as savings accounts, Regulation D limits bank customers to six transfers or withdrawals per month. This rule is in place, in part, because banks aren’t required to hold a reserve against savings accounts.

In general, transaction accounts, which include checking accounts, are considered riskier types of deposits. “You write a check; that check could bounce,” Föehl says. “There’s more risk to the financial institution to have transaction accounts than to have savings accounts.”

Savings accounts are considered safer for banks because — by definition — people aren’t using them for all of their financial business. If you’re writing all your checks on your savings account, it’s not really a savings account. “You can’t call something a savings account if it’s a transaction account,” Föehl says. “This is where the limit comes into play.”

Regulation D’s limits are also a way of encouraging people to save, says Mayra Rodríguez Valladares, a financial regulation consultant and trainer in New York City. “The downside is that if you wanted to withdraw more than six transactions a month you could incur some kind of penalty,” she says.

How does Regulation D work for customers?

If you go over your allowed six transfers or withdrawals, your bank may charge you a fee. If you do it regularly, they may convert your account to a checking account or even close your account entirely.

In general, any account that limits “convenient” transfers and withdrawals is considered a savings deposit account and would be covered by Regulation D. These include:

  • Savings accounts: Deposit accounts in which a customer earns interest on the money they deposit, which often have lower minimum deposits.
  • Money market accounts: Deposit accounts in which a customer earns interest on the money they deposit, and the interest is typically higher than a savings account.

These accounts also come with a “reservation of right” requirement, in which the bank reserves the right, at any time, to require seven days’ written notice of an intended withdrawal — but banks don’t typically do this in practice.

Transactions that are limited under Regulation D

Essentially, Regulation D caps transactions that are considered easy for you to initiate without having to drive to a bank or visit an ATM. That would include:

  • Preauthorized, automatic transactions — including those from a savings account for overdraft protection or for direct bill payments
  • Telephone transfers
  • Withdrawals initiated by fax, computer, email or the internet
  • Transfers made by check, debit card or another similar method made by the depositor and payable to third parties

How can I get around the limits of Regulation D?

You may bypass the six-withdrawal limit under certain conditions, including if you’re willing to travel to your local branch in person. “It’s getting to be less and less of a problem,” Valladares says. Transactions that don’t go against your limit include:

  • Transfers and withdrawals made in person at the bank
  • Withdrawals and transfers requested by mail
  • ATM withdrawals and transfers
  • Transfers and withdrawals initiated by telephone, where the withdrawal gets disbursed as a check and mailed to the depositor

How to avoid trouble with Regulation D

If you’re feeling hemmed in by the six-transaction limit of your savings accounts, there are a few ways to work around it:

  • Visit your bank branch or ATM. Transactions made at your local branch or from your bank’s ATM don’t go against your monthly limit — this is the simplest way to avoid trouble with Regulation D.
  • Plan ahead. If you know you’ll need a certain amount of money in a month, don’t drag it out over multiple transactions — get what you need in fewer trips. Withdraw more at a time.
  • Decline overdraft protection. Generally, overdraft protection works by dipping into your savings account if you write a check that your checking account can’t cover. That counts as one of your six transactions, but if you decline overdraft protection, it can’t happen.
  • Get a checking account. If you need more than six transfers or withdrawals, save yourself some trouble and get a checking account with unlimited transaction power.
  • Don’t pay bills from your savings or money market accounts. Your checking account makes the most sense for regular payment withdrawals. Reconsider setting up a direct debit from your savings account, which will count toward your six transactions.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kate Ashford
Kate Ashford |

Kate Ashford is a writer at MagnifyMoney. You can email Kate at [email protected]

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Banking

I Lost My Debit Card, What Should I Do?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

You’ve dug through your purse, rifled through your drawers and turned the house upside down — but no matter where you look, you can’t find your debit card. What do you do now?

Whether you have a lost debit card, or you suspect it could have been stolen, here are the immediate steps you should take to protect yourself.

Log into your account online as soon as possible

Check your account balance immediately and go over your purchase history for any transactions you don’t recognize, even if they are in small amounts. Take note of any purchases you know are fraudulent or unauthorized, and write down all the details.

You might even be able to disable or lock your lost debit card via your bank’s app or website, said Kris Alban, executive vice president of iGrad, a San Diego-based financial literacy company.

“Bank of America, Wells Fargo and a few other banks offer this feature, making it possible to shut down the card yourself within seconds of theft or loss,” he said.

Call your bank and notify them about the lost debit card

Let your bank know that you have a lost debit card, and inform them of any suspicious transactions you’ve noted from checking your account online.

Below is a handy alphabetical table of contact phone numbers for major U.S. banks, depending on whether you’re calling from the U.S. or from abroad. If you can’t find your bank below, check their website for their toll-free customer service number.

BankFrom the U.S.From abroad
Bank of America800-432-1000+1 315-724-4022
Capital One800-655-2265+1 804-967-1000
Chase800-935-9935+1 713-262-3300
Citibank800-274-6660+1 813-604-3000
PNC Bank888-762-2265+1 412-803-7711
US Bank800-872-2567+1 503-401-9991
Wells Fargo800-869-3557Check number to call here

Decide whether you want to cancel the lost debit card outright and get a replacement, or simply put a temporary hold just in case it turns up somewhere in between your sofa cushions. There may be a fee for the replacement card or to have it rushed to you in case you need it right away.

Whatever the course of action, make sure to keep track of your conversation by asking for the confirmation number for your case and the name and employee ID of the person you speak to. Keep this information somewhere safe and easily accessible.

Understand your rights under the law

According to Alban, the sooner you report your lost debit card, the more likely it is you’ll recover any funds that were stolen.

“While debit cards don’t have the same protections as credit cards, there are federal laws that protect you,” he said.

Federal law stipulates the following:

  • If you contact your financial institution within two business days of the discovery of the missing card, if fraudulent charges have already been made, the most you’ll be responsible for is $50.
  • If you wait longer than two days to report a lost debit card, your liability increases to $500.
  • If you don’t inform your card issuer for more than 60 days after receiving your next statement, you’ll be responsible for all unauthorized charges.

Thanks to the Electronic Funds Transfer Act, you are not responsible for any charges incurred on your card after you’ve notified your bank of its loss.

Cancel any recurring or scheduled debit transactions

Make alternative arrangements to pay your bills, so you don’t get hit with late fees or get your electricity suddenly cut off without warning. Update your suppliers as needed with your new bank card information once you receive it.

Follow up with your bank in writing, if required

Some banks may ask you to provide written confirmation of any disputed transactions on you account; make sure you follow up in writing within 10 business days.

In most cases, your bank or card issuer has 10 business days to investigate the issue. If they need more time, they need to issue a temporary credit to your account of the disputed amount — minus $50, maximum — while they continue to investigate. They have to correct any errors within one business day after determining them and must report their findings to you within three business days.

Implement a plan of action to ensure it doesn’t happen again

Some measures you can put in place for your added security include changing the PIN number to your card and asking your bank to alert you when purchases are made over a certain amount.

Ensure your bank can get ahold of you in case of an emergency, and that you also have their toll-free number handy if you need to contact them again in a hurry.

To avoid an embarrassing situation where you find yourself unable to pay, consider getting a backup credit card for emergencies.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Barbara Balfour
Barbara Balfour |

Barbara Balfour is a writer at MagnifyMoney. You can email Barbara here

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How Do ACH Payments Work?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Ever wonder what those little notations about ACH credits and debits in your banking statements mean? You’re not alone. As consumer spending habits have evolved, ACH payments have become an integral part of our financial lives — even if most people don’t understand what’s happening behind the scenes.

ACH is short for Automated Clearing House, a network and processing system that financial institutions use to transfer funds electronically. It’s been around since the mid-1970s, when it began facilitating direct deposits of paychecks and social security payments. The ACH now processes 25 billion electronic transactions each year, totalling $43 trillion. The system is overseen jointly by the Federal Reserve Board and the National Automated Clearing House Association (NACHA), which groups more than 10,000 member financial institutions.

“The ACH Network really does serve as the backbone for money movement in today’s economy,” says NACHA Senior Director & Group Manager Victoria Day. “It’s one of the few payment systems that has the ability to reach all U.S. bank accounts, so it provides real value to consumers and business, fintechs and financial institutions.”

Indeed, ACH is the foundation of today’s fintech app ecosystem, as funds transfer services (e.g. PayPal, Venmo, Zelle, Square Cash and Google Wallet) use it to process transactions linked to bank accounts.

How ACH transactions work

ACH Network transactions begin and end with banks. Though the originator of a transaction might be an individual or a company, ACH transactions require bank accounts at both ends. An ACH credit — say, a tax refund or a single bill payment by a consumer — pushes funds into the receiving account. An ACH debit — such as a consumer’s recurring monthly bill payment — automatically pulls money from the originating account.

The process sounds straightforward enough, until you consider the sheer volume of transactions that must be verified and securely processed. An Originating Depository Financial Institution, like your bank, aggregates transactions from all its customers and transmits them in batches at predetermined intervals to the ACH. The batches are processed by ACH and settled — during normal business hours — and then transmitted to each Receiving Depository Financial Institution, where transactions are finalized in the designated receiver’s bank account.

Until a few years ago, NACHA rules required each ACH credit transaction to be settled in one to two business days, and ACH debit transactions to be settled in one business day. However, in 2016 the ACH began offering Same Day ACH, an expedited option that increases the movement of funds between financial institutions from one to three times each day.

“There are times when a consumer or a business needs to send or receive money quickly,” notes Day, and Same Day ACH was designed to help facilitate that.

Benefits of ACH payments for banks and consumers

Safety and reliability are two of the top benefits of the ACH Network, says Day. But there are other advantages as well.

Benefits of ACH transfers for consumers:

  • No fees, typically: Most financial institutions don’t charge customers a fee for ACH transfers. The ACH Network is funded, primarily, by NACHA member financial institutions, who pay fees to cover the costs of operation.
  • Convenience: Paying bills by writing and mailing checks each month takes can take considerably more time and effort than online bill payments via ACH transfers. The ACH system lets consumers feel confident their payments will arrive on time, limiting the risk of late fees or damage to their credit ratings.

Benefits of ACH transfers for banks:

  • Same Day payday: In the past, financial institutions have profited little, if at all, from the ACH Network. The earnings situation has improved somewhat, however, with Same Day ACH. Banks receiving Same Day ACH credits on behalf of customers will be paid an interbank fee of $.052 per transaction by the originating financial institution.
  • New features for bank customers: Same Day ACH give banks new value propositions to include in their products and services for a new generation of consumers. That includes expedited bill pay, better P2P payment service, and cheaper wire service.

What’s the difference between ACH, wire transfers, and EFT?

ACH payments vs. EFT

There is some confusion when it comes to comparing ACH payments and electronic fund transfer (EFT) payments. That’s because various companies commonly refer to ACH payments as EFTs or EDIs (electronic data interchange). Here’s something else that probably doesn’t help: Because the ACH network is electronic, all ACH payments are EFTs, but not all EFT payments are ACH.

Here’s the deal: The banking industry thinks of EFTs as a general term for any method of transferring funds electronically from one bank account to another, including wire transfers, credit card payments and online purchases. Because the ACH Network is backed by the federal government, though, it boasts a higher level of security than other EFT options.

ACH payments vs. Wire Transfer

Both wire transfers and ACH transactions involve one financial institution sending funds to another electronically. However, wire transfers use a different network, Fedwire, and can move funds domestically and internationally with equal ease. (International ACH transfers, on the other hand, are more complicated.)

Speed is the great advantage of a wire transfer, which can send funds from one bank account to another instantly. For certain transactions where speed is essential — closing on a new home, for example — wire transfers may be a requirement. A wire transfer’s speed does come at a cost, though: wire transfer fees can range from $15 to $30 or more for domestic wire transfers and $35 to $45 or more for international ones.

Another caveat is that a wire transfer’s speed can sometimes be a vulnerability. Because the money moves instantly, this type of transfer is particularly appealing to criminals who might try to, say, scam home-buyers into wiring funds into the wrong account.

Payment typeProsCons
ACHMost secure, free of chargeSomewhat less speedy
EFTFacilitates online purchasesLess secure
Wire transferHigh speedFees, risk of outsider fraud

Examples of ACH payments

The 25 billion annual transactions handled by ACH covers a lot of ground, yet they tend to fall into a handful of general categories. Consumers use them for direct deposits of payroll earnings, tax refunds and government benefits, such as Social Security payments.

They are also used to pay taxes and bills, to make payments to individuals, and to move funds from one bank to another. Businesses use them to pay other businesses for goods and services.

Basically, you can use ACH to pay for just about anything that you might previously have paid for by paper check — only more quickly, reliably and securely.

The bottom line

ACH payments have radically changed the way we manage money, and are integrated into the modern fabric of how most of us receive and send funds. There are times, though, when ACH isn’t available — say, with many online stores — and you’ll be paying with a different type of ETF. And there are other times, still, when a wire transfer or money order might make more sense.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kate Rockwood
Kate Rockwood |

Kate Rockwood is a writer at MagnifyMoney. You can email Kate here

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