Regulation D

Regulation D

Regulation D is a federal rule established by the Federal Reserve that governs certain types of deposit accounts, particularly savings accounts and money market accounts. Historically, it limited the number of certain withdrawals or transfers you could make from these accounts each month, typically to six transactions per cycle. The rule was designed to help banks manage their cash reserves and maintain financial stability.

In April 2020, the Federal Reserve officially removed the six-transaction limit from Regulation D, giving banks more flexibility in how they apply these restrictions. However, many banks and credit unions still choose to enforce similar limits on their own, so you will generally want to check the specific policies of your financial institution. In most cases, exceeding any transaction limits your bank sets may result in fees, account conversion to a checking account, or other penalties.

Why it matters

Regulation D, and the policies that grew out of it, directly affects how you access money in your savings or money market account. If your bank still enforces transaction limits, moving money too frequently can lead to unexpected fees. Understanding these rules helps you plan your transfers and withdrawals more carefully, avoiding unnecessary costs.

For consumers who use savings accounts as a short-term spending buffer, being aware of any lingering transaction limits is especially important. Regularly exceeding your bank’s limits could cause your account to be reclassified as a checking account, which may affect the interest rate you earn.

Example

Suppose you have a savings account at a bank that still enforces a six-transaction monthly limit. During the month, you transfer money to your checking account five times to cover various bills. Near the end of the month, you initiate a sixth transfer, reaching the limit. If you then attempt a seventh transfer before the month ends, your bank may charge you an excess withdrawal fee, typically ranging from $5 to $15 per transaction, or flag your account for review. Keeping a simple log of your monthly transfers can help you avoid this situation.

Related terms

• Money market account
• Savings account
• Reserve requirements
• Checking account
• Excess withdrawal fee