Regulation D (FRB)
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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. The regulation applies to all United States banking institutions offering such accounts.
In consumer banking, "Regulation D" often refers to §204.2(d)(2) of the regulation, which places a limit of six withdrawals or outgoing transfers per month from savings or money market accounts via several transaction methods. Transactions counted against the limit include "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." Transactions not counted against the limit include "mail, messenger or in person or when such withdrawals are made by telephone (via check mailed to the depositor)."
The law was amended in 2009 to allow greater freedom for the depositor: beforehand, the limit was six withdrawals per month if the funds remained within the same institution (e.g., transfer to checking), but was only three drafts where the funds left the institution (e.g., check, ACH, or card based purchase).
The number of deposits or incoming transfers into savings or money market accounts is not limited.
Regulation D defines the rules of each account type, and in particular its reserve requirement — the aspect of law that applies to this six-transfer limit. Online access to bank accounts has brought with it the ability to make transfers to and from various accounts. A savings account is classified within the banking and regulatory system as a “saving deposit”, and the required reserve requirement for a bank on a “saving deposit” is 0% of the balance, versus approximately 10% on a “transaction account” such as a checking account. This reserve requirement stipulates how much of the account balance a bank is required to keep in reserve (i.e. the portion of a deposit a bank may not give out in the form of a loan). A bank which holds a deposit in a consumer's savings account is not required to hold any of that back in reserve and may lend out the entire amount, as the reserve requirement on a savings account is 0% whereas on checking accounts (known as "transaction accounts"), the bank would be forced to retain an amount equivalent to 10% of the balance on hand. This is because transaction accounts will have more frequent drawing of funds (hence the need for a reserve). To maintain the "saving deposit" designation, the six-transfer limit is applied to savings accounts. The six-transfer limit seeks to limit the transactions that would otherwise traditionally fall into the category of a checking account (even though this limit can now be circumvented through ATM transfers and certain other enumerated methods).
Regulation D of the Federal Reserve