What Is Regulation D in Banking?

Regulation D is a set of government rules for banks and credit unions. Regulation D used to restrict how often you could withdraw money from your savings account, but those limits have been suspended since the COVID-19 pandemic.

What is Regulation D?

Regulation D, or “Reg D,” is a Federal Reserve regulation telling banks and credit unions how much they need to keep as reserve requirements. This makes sure these financial institutions have enough cash on hand to pay back their deposits and other liabilities.

The main effect for regular consumers from these Regulation D banking rules were the old withdrawal limits for savings accounts.

Until April 2020, banks had to restrict how often customers could take money out of their savings or money market accounts — specifically, no more than six withdrawals per month.

Those withdrawal rules are not currently in force, although some banks still have their own limits.

How Regulation D works

What transactions were affected by Regulation D?

Regulation D only applied to certain types of savings account withdrawals and transfers, including:

• Bill payments
• Overdraft transfers
• Checks written to a third party
• Debit card transactions
• Online transfers
• Phone or fax transfers
• Wire transfers

What transactions weren’t affected by Regulation D?

A few types of transactions that were not affected by Regulation D, including:

• Withdrawals made inside a bank
• Withdrawals made at ATMs
• Withdrawals made over the phone, but only if the bank sent you a check by mail

What happens if you exceed the withdrawal limit?

While many banks and credit unions have eliminated monthly withdrawal limits, some still enforce them.

If you exceed your limit, you may be charged an excessive withdrawal fee, which usually ranges from $5 to $30 but can be more. In some cases, repeatedly exceeding the limit may lead to your account getting converted into a checking account or even closed.

If you want to easily tap into your savings as needed, consider a financial institution with flexible withdrawal policies and no fees.

How to avoid reaching the withdrawal limit

Here are some steps you can take to avoid excessive withdrawals and the fees that may come with them:

1. Consider a checking account

You can avoid withdrawal limits by using a checking account, either instead of — or along with — your savings account. Checking accounts are meant for everyday spending and don’t usually have withdrawal limits. You can keep a buffer in your checking account to pay unexpected bills, so you’re not forced to dip into savings.

2. Make in-person transfers

If you’re worried about hitting your account’s withdrawal limit, try visiting your bank in person. Transferring or withdrawing money directly with a teller typically doesn’t count toward your limit.

3. Sign up for balance alerts

If you have overdraft protection, your bank may automatically transfer money from your savings to cover a shortfall in your checking account, and this can count toward your withdrawal limit. Monitor your account balance so you know whether you need to slow down spending or deposit more funds.

4. Use an ATM

Another option is to withdraw money from your savings account at an ATM. In most cases, ATM withdrawals don’t count toward your monthly limit.

How has Regulation D changed?

The Federal Reserve shifted its reserve strategy and suspended the savings account withdrawal limit rule in 2020. This was part of a broader effort to give consumers easy access to their money during the COVID-19 pandemic.

But while banks and credit unions are no longer required to enforce the Reg D limit, some still do. If unlimited access to your savings is important to you, look for a bank that doesn’t have withdrawal restrictions.

Regulation D (Federal Reserve) vs. Regulation D (SEC)

The Regulation D banking rules discussed in this article shouldn’t be confused with the different Regulation D that is set by the Securities and Exchange Commission (SEC).

What is regulation D in banking versus in financial markets? Here’s the breakdown:

Frequently asked questions

Is Regulation D still suspended?

At the time of writing, the Regulation D rule that put a limit on monthly savings withdrawals is still suspended. However, some financial institutions continue to restrict savings transactions and charge fees after a certain number of withdrawals.

What is Regulation E?

Regulation E is a set of federal government rules for electronic funds transfers. Its purpose is to help protect consumers who transfer money without using physical currency or checks.

Why do banks limit withdrawals from savings accounts?

Even though banks don’t have to limit savings withdrawals under Regulation D anymore, some still do. Banks may do this for several reasons, including to maintain their financial stability and to ensure they have enough cash to meet customers’ withdrawal demands.