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Have you ever received a message, phone call or notice in the mail regarding excessive transactions and Regulation D (“Reg. D”) from your bank? It’s a pretty common occurrence in a world of electronic access to accounts via online banking, mobile banking, debit cards and ACH transactions. So, what exactly is Reg. D and what are excessive transactions?
Reg. D is part of the Federal Reserve Bank’s monetary policy: it imposes account limitations and reserve requirements for non-transaction accounts at all depository institutions such as savings banks, credit unions and commercial banks. The regulation requires that depository institutions place funds on reserve with the Federal Reserve Bank in proportion to the deposit balances in their customers’ non-transaction accounts and limits customer withdrawal activity on these types of accounts.
Let’s break down Reg. D and take a look at how it can impact you:
The excessive transaction limitations for non-transaction accounts within Reg. D apply to savings and money market accounts – these are deposit accounts that are meant to be a source of savings and, by nature, should have little to no withdrawal volume. Reg. D specifically outlines transactions that can be done on a limited basis from a savings or money market accounts and limits any combination of the restricted transactions to six per statement cycle. When the total of restricted transactions processed in a statement cycle is more than six, the additional transactions are known as excessive transactions.
Per Reg. D, the following transactions are restricted to a combined total of only six transactions per statement cycle on a savings or money market account:
• Transfer or payment requests from the account made via online banking (including bill pay and mobile banking), or by telephone, email and fax
• Debit card purchases (POS)
• Pre-authorized transfers, withdrawals or payments to a third party (ACH and wires)
• Transfers to non-loan accounts at the same institution
• Transfers to provide overdraft protection on another account at the same institution
• Checks or drafts made payable to a third party
The following withdrawals can be done in unlimited numbers on a savings or money market:
• In person at a branch location
• ATM (Withdrawal or Transfer)
• By mail or messenger
Depository institutions are required by law to monitor excessive transactions and ensure that customers are not exceeding the imposed limits outlined by Reg. D. Exceeding the allowed transactions on a savings or money market account may result in fees assessed for each excessive transaction processed. If you continually exceed the transaction limitations, your financial institution may reclassify your account type, take away your ability to perform any restricted transactions in the future, or close your account.
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