Savings account withdrawal limits and Federal Reserve Regulation D explained

Some banks restrict how many withdrawals you can make

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Federal Reserve Regulation D used to require banks to enforce a limit of no more than six convenient transfers or withdrawals from a savings account each month. As of April 2020, this limit was suspended indefinitely. However, banks can still impose these types of limits at their discretion.

It’s essential to understand what, if any, transaction limits apply to your account because you may incur fees if you exceed the established limit. Plus, some banks convert your savings account to a checking account if your transaction activity regularly exceeds the limit.


Key insights

  • Federal Reserve Regulation D used to limit the number of convenient transfers or withdrawals you could make from a savings account to six per month.
  • As of April 2020, banks are no longer required to impose this limit. However, some have chosen to keep these limits in place.
  • Contact your bank to see if a transfer or withdrawal limit applies to your account. You may be charged fees for transactions above the limit, or the bank may convert your account from a savings account to a checking account if you regularly exceed the limit.

What is Regulation D?

Regulation D is a rule created by the Board of Governors of the Federal Reserve System (the Fed) that specifies how banks must manage some of your deposits. Before April 2020, this regulation specified you couldn’t make more than six monthly transfers or withdrawals from a savings account.

The six-transaction limit was suspended in April 2020, but banks can keep transfer limits in place at their discretion. These limits only apply to savings accounts, a type of nontransaction deposit account. Limits like these are not placed on transaction deposit accounts, like checking accounts.

Notably, the transaction limits previously imposed by Regulation D only applied to convenient transfers from savings accounts. Convenient transfers include those initiated online, by phone, via check and by other easily accessible means. It did not cover transfers that were not as convenient, such as those made in person at a bank branch or via an ATM.

With the transaction limit change to Regulation D, banks can now set their own transaction limits on savings accounts. Some have chosen to not set any transaction limits at all.

Importantly, Regulation D is still in place, but it mostly affects how banks manage your deposits. For example, it allows the Fed to request and monitor reports from banks about their assets and liabilities (funds they’ve lent out and have on deposit).

» MORE: Should I open a savings account?

Why was Regulation D created?

Regulation D was designed to help the Fed implement policies related to the availability and cost of money. It specified that banks must set aside and not use some of the money their customers hold in deposit accounts with them.

“Banks profit by taking the money you deposit and then lending it to other people and charging interest,” said Todd Stearn, founder of The Money Manual, an online financial resource. “Regulation D prevents banks from lending out all the money they receive.”

How has Regulation D changed?

In April 2020, the six-transaction limit under Regulation D was suspended. Because many branches were closed at this time due to the COVID-19 pandemic, this was done to give consumers greater access to their savings remotely.

While banks no longer need to place transfer limits on savings accounts, some banks have chosen to keep these limits in place. Check with your bank to see what transfer or withdrawal limits, if any, still apply.

How does Regulation D affect you?

Although banks are no longer required by Regulation D to have transfer or withdrawal limits on savings accounts, some still do. You can check with your bank to see if transfer or withdrawal limits still apply to your savings accounts.

Check with your bank to find out what, if any, transfer or withdrawal limits apply to a savings account.

Also, if you’re thinking about opening an account at a new bank, consider its rules as a part of your decision-making process. If you exceed transaction limits, you could be penalized.

“Without proper education, a consumer can have their savings account converted to a checking account and lose the opportunity to earn interest due to too many withdrawals or transfers, or (they could) face fees,” said Robert Schmidt, a partner development manager with Abrigo, a technology company that helps support banks.

Before choosing a bank account, consider how you plan to use the funds. If you plan to make lots of deposits, transfers and withdrawals, you might be better off choosing a checking account than a savings account. Conversely, if you rarely plan to touch the funds, a certificate of deposit (CD) might be a better option.

By considering your financial needs, you’ll be better equipped to choose the right bank account for your situation.

» MORE: Best Banks

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FAQ

Is Regulation D still in effect?

While Federal Reserve Regulation D is still in effect, banks are no longer required to enforce the savings accounts withdrawal limits. Before April 2020, convenient transfers or withdrawals from a savings account were limited to six per month. Banks are no longer required to enforce this limit, but some have chosen to continue to do so.

What accounts are not covered by Regulation D?

Federal Reserve Regulation D includes definitions for transaction accounts (e.g., checking accounts) and nontransaction accounts (e.g., savings accounts, CDs). Under a previous rule required by Regulation D, convenient transfers or withdrawals from savings accounts were limited to six per month. As of April 2020, banks are no longer required to enforce this limit, although some still do.

What qualifies as a savings account under Regulation D?

Regulation D classifies a savings account as an interest-bearing banking account without a maturity date. Under previous rules, it was classified as a nontransaction account, and the number of convenient transfers or withdrawals made each month was limited to six. In April 2020, this limit was suspended indefinitely.

Bottom line

Federal Reserve Regulation D previously limited convenient transfers or withdrawals from a savings account to no more than six per month. This rule was suspended in April 2020, and, as far as we know and as far as the Federal Reserve has said, it’s suspended indefinitely.

Even so, some banks still limit the number of transfers or withdrawals you can make from a savings account each month. Make sure you understand your bank’s rules and any transaction limits that apply to your account so you don’t incur avoidable fees.


Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. Federal Reserve, “ Consumer Compliance Handbook — Regulation D, Reserve Requirements .” Accessed Feb. 13, 2023.
  2. National Archives and Records Administration, " Regulation D: Reserve Requirements of Depository Institutions ." Accessed Feb. 13, 2023.
  3. United States Government Accountability Office, " Federal Reserve: Observations on Regulation D and the Use of Reserve Requirements ." Accessed Feb. 16, 2023.
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