complaint - why are we regulated to 6 online transfers/month

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touchdowntodd
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complaint - why are we regulated to 6 online transfers/month

Post by touchdowntodd »

my CU states that the reason I can not complete more than 6 transfers per account is due to federal law..

any ideas as to why this law is in place?

is my CU full of sh*T?

sorta a pain to try to make sure i dont transfer too much, etc... we have our main credit card through them, payments count as a transfer, my wife and i typically transfer money as needed back and forth, I try to save as much as I can so I transfer every 1-2 weeks what I know i can spare..

why is this?
tryin to do this right... thanks guys
The Wizard
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Post by The Wizard »

It's not federal law; your CU is making this up.
My CU has no limit on transfers or check-writing per month, just limit of 8 FREE ATM withdrawals per month.

I'm talking about my CU checking account here; I no longer do a savings account with them...
Last edited by The Wizard on Mon Mar 28, 2011 12:23 pm, edited 1 time in total.
spefactor
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Post by spefactor »

My account at Ally has a similar restriction. It only applies to savings accounts. They also cite federal laws.
sscritic
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Post by sscritic »

Yes it is federal law (or regulation to be technical). Regulation D.
Reserve Requirements for Depository Institutions (Regulation D) is a Federal Reserve Board regulation that limits the number of preauthorized withdrawals and transfers from a savings account or money market account.
http://en.wikipedia.org/wiki/Regulation_D_(FRB)

This does not apply to a true checking account.
dailybagel
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Re: complaint - why are we regulated to 6 online transfers/m

Post by dailybagel »

touchdowntodd wrote:my CU states that the reason I can not complete more than 6 transfers per account is due to federal law..

why is this?
As a poster above wrote, this doesn't apply to true checking accounts.

If you're asking about the policy reason behind this, it's probably to limit (in a gentle way) the liquidity of funds in savings/MMA accounts, which typically pay a higher interest rate.

Checking accounts are considered "demand deposits," which the bank is able to pay out at a moment's notice. The 6-withdrawal limit keeps people from using MMAs as checking accounts.
http://www.dcu.org/streetwise/howto/regd.html

As an example of this idea, economists use different measurements of money supply, and treat checking accounts (included in M1) as more liquid than savings accounts (not included in M1). (Or maybe the distinction is that money in checking accounts empirically has more velocity than that in savings accounts.)
http://en.wikipedia.org/wiki/Money_supply

I should point out that at my credit union, they interpret the regulation as governing transfers OUT FROM the money market account, and I can make as many transfers INTO the MMA as I want each month.
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rcshouldis
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Post by rcshouldis »

spefactor wrote:My account at Ally has a similar restriction. It only applies to savings accounts. They also cite federal laws.

Same here.
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Yuba
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Post by Yuba »

I believe the bank does not *have* to enforce this. My Credit Union has no such restrictions on pre-authorizations from my savings account. There is even a section when I view the savings balance that says "Reg D Limit: none"

Rick dba Yuba
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Steelersfan
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Post by Steelersfan »

Ask your CU if they have an interest bearing checking account that pays you interest similar to your savings account. That way you can do as many transactions as you want, subject to whatever policy they have on charging for those types of accounts.
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dm200
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Post by dm200 »

Yuba wrote:I believe the bank does not *have* to enforce this. My Credit Union has no such restrictions on pre-authorizations from my savings account. There is even a section when I view the savings balance that says "Reg D Limit: none"

Rick dba Yuba
Of course, credit unions are obligated to enforce laws and regulations, and Reg D is a federal regulation. Since this regulation does not apply to transaction accounts, what some credit unions do is classify all accounts as transaction accounts for purposes of Reg D, and then the Reg D limits do not apply. However, this is (or may not be) without cost to the credit union since there are reserve requirements based on transaction account balances.
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touchdowntodd
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Post by touchdowntodd »

this is odd, because the limit is also on my checking, which effects me the most and is the most troublesome for me in dealing with this
tryin to do this right... thanks guys
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MooseDad
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Post by MooseDad »

spefactor wrote:My account at Ally has a similar restriction. It only applies to savings accounts. They also cite federal laws.
It also applies to Ally Money Market accounts (currently paying 1.00%, same as Ally savings accounts) but not to Ally true "checking" accounts (currently paying only 0.50% on balances less than $15k).

You can write checks on an Ally Money Market account, but only 6 per month.
sscritic
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Post by sscritic »

touchdowntodd wrote:this is odd, because the limit is also on my checking, which effects me the most and is the most troublesome for me in dealing with this
Are you sure?

A google search for credit union checking regulation d shows many credit unions with the same restrictions which apply to savings and money market accounts but not to checking.
http://www.google.com/search?q=credit+u ... gulation+d

Google for your own institution. Read the fine print in the terms and conditions (or deposit agreement and disclosure as it is often called).
taurabora
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Post by taurabora »

Regulation D thwarted by removing entire balance in one transaction!
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Post by nisiprius »

ING Direct not only says they limit transfers to 4 a month, but I innocently forgot this--I had set up automatic weekly transfers for no good reason and then added an automatic monthly transfer--and got an email warning about it.

I called and they explained and said that if kept exceeding it there was no hairtrigger, but at some point they'd close the account and send me the balance. They noted that the limit is per individual savings account at ING. They, too, said it was a federal regulation.
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Random Musings
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Post by Random Musings »

Nisprius wrote:
They, too, said it was a federal regulation.
Well, that regulation must have some name to it. Tell 'em you need to know.

RM
sscritic
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Post by sscritic »

nisiprius wrote:ING Direct not only says they limit transfers to 4 a month, but I innocently forgot this--I had set up automatic weekly transfers for no good reason and then added an automatic monthly transfer--and got an email warning about it.

I called and they explained and said that if kept exceeding it there was no hairtrigger, but at some point they'd close the account and send me the balance. They noted that the limit is per individual savings account at ING. They, too, said it was a federal regulation.
It's not four, but the warning is correct:
In order to ensure that no more than the permitted number of withdrawals or transfers are made, for an account to come within the definition of "savings deposit," a depository institution must either:

(a) Prevent withdrawals or transfers of funds from this account that are in excess of the limits established by paragraph (d)(2) of this section, or

(b) Adopt procedures to monitor those transfers on an ex post basis and contact customers who exceed the established limits on more than occasional basis. For customers who continue to violate those limits after they have been contacted by the depository institution, the depository institution must either close the account and place the funds in another account that the depositor is eligible to maintain or take away the transfer and draft capacities of the account. An account that authorizes withdrawals or transfers in excess of the permitted number is a transaction account regardless of whether the authorized number of transactions is actually made. For accounts described in paragraph (d)(2) of this section, the institution at its option may use, on a consistent basis, either the date on the check, draft, or similar item, or the date the item is paid in applying the limits imposed by that section.
http://www.fdic.gov/regulations/laws/ru ... dicfoot4_4

Actually, you can have several accounts and use one of your transfers to fill the second account, but the bank can't tell you about this strategy.
§ 204.133 Multiple savings deposits treated as a transaction account.

(d) Examples. The distinction between appropriate and inappropriate uses of multiple accounts is illustrated by the following examples:

Example 1. (i) X wishes to open an account that maximizes his interest earnings but also permits X to draw up to ten checks a month against the account. X's Bank suggests an arrangement under which X establishes four savings deposits at Bank. Under the arrangement, X deposits funds in the first account and then draws three checks against that account. X then instructs Bank to transfer all funds in excess of the amount of the three checks to the second account and draws an additional three checks. Funds are continually shifted between accounts when additional checks are drawn so that no more than three checks are drawn against each account each month.

(ii) Suggesting the use of four savings accounts in the name of X in this example is designed solely to permit the customer to exceed the transfer limitations on savings accounts. Accordingly, the savings accounts should be classified as transaction accounts.

Example 2. (i) X is trustee of separate trusts for each of his four children. X's Bank suggests that X, as trustee, open a savings deposit in a depository institution for each of his four children in order to ensure an independent accounting of the funds held by each trust.

(ii) X's Bank's suggestion to use four savings deposits in the name of X in this example is appropriate, and the third party transfers from one account should not be considered in determining whether the transfer and withdrawal limit was exceeded on any other account. X established a legitimate purpose, the segregation of the trust assets, for each account separate from the need to make third party transfers. Furthermore, there is no indication, such as by the direct or indirect transfer of funds from one account to another, that the accounts are being used for any purpose other than to make transfers to the appropriate trust.

Example 3. (i) X opens four savings accounts with Bank. X regularly draws up to three checks against each account and transfers funds between the accounts in order to ensure that the checks on the separate accounts are covered. X's Bank did not suggest or otherwise promote the arrangement.

(ii) X's Bank may treat the multiple accounts as savings deposits for Regulation D purposes, even if it discovers that X is using the accounts to increase the transfer limits applicable to savings accounts because X's Bank did not suggest or otherwise promote the establishment of or operation of the arrangement.
http://ecfr.gpoaccess.gov/cgi/t/text/te ... 12;cc=ecfr
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verbose
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Post by verbose »

I got burned by this regulation (and CU incompetence) big time. At age 17, my dad set me up with a checking and savings account at his work CU. The CU rep who set it up told me that if I overdrew checking, there would be an automatic withdrawal from savings to cover it. She didn't mention a limit. My dad suggested that I leave checking with a zero balance since the savings paid interest and checking didn't.

I made it two years without accidentally triggering the monthly transaction limit that I didn't even know about. Actually, the CU provided me 3 months "grace" of exceeding the limit, but since they didn't tell me anything about it, it wasn't much of a "grace."

Then I hit the limit (which I didn't know existed) and the CU declined to transfer the funds. Four checks bounced in two days: rent, electric, phone and a magazine subscription. In the days before Internet, I didn't realize what had happened until I saw an eviction notice on my apartment door, which occurred before my statement arrived. $200 in bounced check fees from the bank (some were re-deposited before the month ended and bounced twice), $150 in bounced check fees from the billers. I was infuriated, mostly because I'd taken such care with balancing my checkbook and paying my bills on time, and now I'd been branded a deadbeat by my bank, landlord, and utilities.

I closed my CU account shortly afterward.
taurabora
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Post by taurabora »

I think this is probably to prevent people from constantly moving money to different banks, chasing the highest interest rate of the day.
grberry
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Post by grberry »

No, this is a federal regulation for savings accounts. And that regulation is not based on the method of withdrawal, it applies to the number of withdrawals. If you can come up with seven different ways to withdraw and use of each of them in the same month then you will have made seven withdrawals which is in excess of the limit...
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Sheepdog
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Post by Sheepdog »

Just Google "Savings Withdrawal Limit" and you will get all the information you need.
Time is the school in which we learn, time is the fire in which we burn.~ Delmore Schwartz
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Post by xerty24 »

taurabora wrote:I think this is probably to prevent people from constantly moving money to different banks, chasing the highest interest rate of the day.
No it's to stop you from keeping your money in the higher yield savings account and moving $100 over to your non-interest checking account every time you write a check.
sscritic
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Post by sscritic »

I believe I can make 500 withdrawals a month without violating the rules.

Assume 30 days in the month. Assume a limit on ATM withdrawals of $300 a day. Assume you can make an ATM withdrawal for $20. At 15 withdrawals a day, I can make 450 ATM withdrawals in a month. I can also go into the bank and make withdrawals from the teller. I will assume the bank is open 25 days a month, and I will make one withdrawal in the morning and one in the afternoon each of those 25 days. That's 500 withdrawals for the month.

None of the withdrawals were transfers, so I can still make six transfers on top of my 500 withdrawals.
What transactions are not affected by Regulation D?

ATM transactions.
Transactions done in person at a branch
P.S. And I can make 500 deposits into other accounts as well, either at the ATM or in the branch.
jpark1982
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Post by jpark1982 »

At least with Chase it refers to preauthorized transfers. Transfers made in person with. Ateller or at the atm are unlimited.
sscritic
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Post by sscritic »

jpark1982 wrote:At least with Chase it refers to preauthorized transfers. Transfers made in person with. Ateller or at the atm are unlimited.
It's got nothing to do with Chase. That's how the federal regulations are written. That's how a "demand deposit" (including checking account) is distinguished from a "savings deposit."
The term "savings deposit" also means: A deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA), that otherwise meets the requirements of § 204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle (or similar period) of at least four weeks, to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order or instruction, or by check, draft, debit card, or similar order made by the depositor and payable to third parties.....

Such an account is not a transaction account by virtue of an arrangement that permits transfers for the purpose of repaying loans and associated expenses at the same depository institution (as originator or servicer) or that permits transfers of funds from this account to another account of the same depositor at the same institution or permits withdrawals (payments directly to the depositor) from the account when such transfers or withdrawals are made by mail, messenger, automated teller machine, or in person or when such withdrawals are made by telephone (via check mailed to the depositor) regardless of the number of such transfers or withdrawals.
The key is that transfers are not counted against the limit of six "when such transfers or withdrawals are made by mail, messenger, automated teller machine, or in person."
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touchdowntodd
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Post by touchdowntodd »

the point isnt ATM transfers, or anything like that..

my point was just transfers amongst my current accounts

this has brought up a lot of good info!

I still dont understand why i cant do more than 6 electronic transfers from my checking account a month... but thats another story

let's keep talkin! 8)
tryin to do this right... thanks guys
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Steelersfan
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Post by Steelersfan »

touchdowntodd wrote:the point isnt ATM transfers, or anything like that..

my point was just transfers amongst my current accounts

this has brought up a lot of good info!

I still dont understand why i cant do more than 6 electronic transfers from my checking account a month... but thats another story

let's keep talkin! 8)
Check again exactly what type of account you have. Ask your CU if you have to. I doubt if it's officially a checking account.

If it's a money market account with check writing privileges, those are classified as savings accounts which are subject to federal regulations that limit transfers to 6 a month.
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touchdowntodd
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Post by touchdowntodd »

its a straight checking acct, pays no interest, etc..

it holds only my spending money as little as that may be.. but every pay period all of that goes in there, and i save some, sometimes send some to my wife, etc... or pay my credit card through it
tryin to do this right... thanks guys
sscritic
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Post by sscritic »

touchdowntodd wrote:its a straight checking acct, pays no interest, etc..
If it is a straight checking account, then the limitation comes from the bank and not from federal regulations. In your words, they are full of "iT" to blame the limitation on federal law.
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Post by Steelersfan »

touchdowntodd wrote:its a straight checking acct, pays no interest, etc..

it holds only my spending money as little as that may be.. but every pay period all of that goes in there, and i save some, sometimes send some to my wife, etc... or pay my credit card through it
If you want another set of eyes to look at it, post the URL of the CU and what type of account it is. They may well post the T's and C's on the site. Maybe someone can see something to close this issue.

Or you can go higher up in the organization to challenge it.
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