Did you know that you're limited to just six (6) transfers out of a savings account each billing cycle?
If you go over, you could get in trouble. Most banks will even fine you.
Bank of America calls it a Withdrawal Limit Fee and will ding you $10 for each withdrawal or transfer above six (limited to $60). Unless you have a minimum daily balance of an amount that varies with each savings account type. Their Regular Savings requires a minimum daily balance of $20,000 to avoid this fee. (fee schedule, it's on page 4)
Ally Bank will charge you $10 per transaction over the limit. There's no way to avoid it, just in case you had $20,000+ lying around and a desire to make more than six transfers a month you crazy cat you.
Six seems like a lot but if you have unlimited overdraft protection, which is an automatic transfer, it could happen pretty easily (that's how I discovered this limit and fee!).
Why does this six transfer limit exist?
It exists because your account is considered a “savings deposit” and they're subject to different rules.
Why those rules exist has to do with the reserve requirements, or how much the bank needs to keep around in their vaults, on different accounts. The rules regarding those requirements gets complicated and are updated each year depending on what the Fed is hoping to accomplish, so I won't go into it (and it's not relevant).
Section 204.2(d)(2) of Regulation D of the Federal Reserve Board’s definition of a “savings deposit” defines the limit:
You can see it quoted here in a letter from the Federal Reserve in 1996. It's also repeated again in this document, which is far easier to read than the regulation.
A few additional points:
- The limit is only on “convenient” transfers and withdrawals, like preauthorized or automatic transfers.
- It's only a limit on your savings account. You can have an unlimited number of transfers from a checking account.
- Not in the above quote but “institutions must reserve the right at any time to require at least seven days’ written notice of an intended withdrawal (in practice, this right is rarely, if ever, exercised).” Technically, you can request a withdrawal and they can sit on it for 7 days!
What counts as a transfer?
Anything “convenient” counts towards this limit of six.
A “convenient transfer or withdrawal” is:
- Preauthorized, automatic transfers (including overdraft protection and bill payments)
- Initiated by phone, fax or computer
- Made by check, debit card, or other similar order made by you to a third party.
It feels a little arbitrary what convenient means but that's the rule.
How to get around this limit
Make bigger, but fewer, transfers? Then you don't hit six and six is a lot.
Or, you can make “unlimited withdrawals by mail, messenger, ATM, in person, or by telephone (via check mailed to the depositor).” These aren't considered convenient and don't count against the limit.
If you need to make a transfer, you could withdraw it from the ATM from savings and then deposit it into checking. Or you could walk up to a teller and make the transfer.
Why the fee?
Because a bank can? And because it makes it so you pay attention?
If they keep letting you go over the 6 transfer limit, they have to reclassify it as a transaction account… which is a pain. They would much rather you not go over but until you learn, they'll happily collect ten bucks a pop.
Now you know why there is a six transfer limit – go impress your friends. 🙂
The Money Wizard says
March 22, 2017 at 4:04 pmInteresting article. The more you know…
With interest rates so low and preferring to keep my money aaalmost 100% invested, this is partly why I just keep my emergency fund in liquid assets and the rest in a checking account.
Michael says
March 22, 2017 at 9:46 pmBanks limit the number of withdrawals to 6 times per month. Usually, there is no limit to the number of times you can put money into a savings or money market account per month.
ESI Money says
March 27, 2017 at 9:34 amI found this out about a month ago when Chase warned me I was about to hit my “limit”.
I didn’t even know I had a limit!!!
Now I transfer as much as I want using my CHECKING account.
Hillori Sartin says
May 20, 2019 at 6:42 pmChase didn’t even warn me. Just charged me a fee. I never heard of this before, but I put the lady in a corner when I read her the part that says atm withdrawals don’t count. This is absurd. Charging me for using the money I put into my account!
Kelly Carpenter says
March 16, 2018 at 12:19 pmI still think it’s over reaching government control over our own money!
Jim Wang says
March 16, 2018 at 2:57 pmWhy? It’s just a rule for savings accounts.
Dee says
June 18, 2018 at 3:48 pmBecause it’s NOT THEIR MONEY!
Ron says
May 18, 2019 at 11:24 pmWhy, Really ? It’s My money Not the Federal Reserves and or Banks or Any Government Agency. Do the “limit” how many times I make a Deposit ? Why not ? That will change the available money on hand at the Bank… I just got hit from Chase for $25 for 5 transfers, $5 for 5 transfers… Monday I’ll be CLOSING my Chase Account…
Jim Wang says
May 19, 2019 at 8:28 amIf you kept it in a checking account, you wouldn’t have been affected by this – it’s because savings accounts have different rules. It’s a Federal Reserve rule and not a bank’s rule, they’re just following them.
Edward C Noonan says
February 19, 2019 at 8:45 pmIt’s not the “government” it is the FEDERAL RESERVE BOARD which has NOTHING to do with the government. There is no lawful basis for this crap, but is a “regulation” the FED is burdening us with!
Jim Wang says
February 20, 2019 at 6:53 amThe Federal Reserve System was created by Congress to act as a central bank for the United States and as such establishes rules and regulations for banking. There is lawful basis… but you can always just use checking accounts and not have to deal with any ACH transfer limits.
John says
April 26, 2019 at 12:13 pmWang you must work for a big bank raking in other peoples money either in fees or paying them peanuts while you make big cash investing their cash. Because this is the only way you think this is ok. Call your congressman and senators folks this is B.S.
Jim Wang says
April 27, 2019 at 7:46 amNope – I work for myself!
David Cohen says
March 22, 2018 at 4:40 pmIf the number of “convenient” transactions exceeds six and the institution need to reclassify the account, it then must keep a higher percentage of its assets in cash, so it is disadvantageous for them to have to do that.
rairai says
March 28, 2018 at 6:50 amThis is wrong. Its only transfers *OUT* of the savings account.
Jim Wang says
March 28, 2018 at 7:02 amI updated the post to be correct, I missed a spot where I had said it included transfers IN when the limit only counts for transfers OUT.
Kevin Reetz says
April 12, 2018 at 11:49 amWhat’s the $10 fee (theft IMO) go towards?
Jim Wang says
April 12, 2018 at 4:22 pmThe fee can sometimes be even higher than $10 but it doesn’t go towards anything.
Cindy Coffey says
April 4, 2019 at 5:14 pmWells Fargo charged me $15 and stopped notifying me I was reaching my limited in my opinion it was just so that they could collect the fee
Jim Wang says
April 5, 2019 at 6:51 amI don’t think banks like to collect this fee because if this happens too much to them, they can get in trouble (in theory).
There are only a handful of banks that remind you that you can only transfer 6 times. Only recently did I see a small warning on my Capital One 260 account during a transfer.
James W Ballinger Sr says
January 10, 2019 at 12:54 pmThis is a ridiculous fee since banks charge an excessive fee for an overdrawn check. In addition, while one may earn perhaps 0.05% on any money saved, but a bank will charge up to 10% on a simple loan.
Al Capone was more fair!!!
Betty says
June 19, 2019 at 10:32 pmAh, but all those fees banks charge mean even greater profits, and a giant paycheck for the bank’s CEO, who’s got a ton of tax-sheltered investments to help ensure his offspring will never have to work for living. Sick!
Lael says
March 16, 2019 at 1:53 amThat’s absolutely ridiculous that anyone is able to dictate how many times you can move your OWN money.
Jim Wang says
March 16, 2019 at 8:13 amYou agree to it when you create a savings account. They don’t want the account to be heavily transacted because they only hold a small percentage of those funds on hand.
Ed says
March 31, 2019 at 4:47 pmI only have a Debit Card and found out about this RULE when I transferred money eight times in one month from MY savings account into MY checking account. I’ve tried to limit my exposure to unauthorized debit card transactions of thief’s by transferring enough money from savings to checking to cover a withdrawal I made.
First Federal Bank fined me $10 and said that if it happens again, they will cancel my savings account…..didn’t say what they would do with my money.
USA citizens are not nearly as free as our government tries to say we are…..
Ryan says
May 16, 2019 at 1:26 pmSo, if I have it right. You can transfer numerous times from a checking (considered a transaction account) to another checking (transaction account) with no issue. But you cannot transfer more than 6 times from saving because then it would then be classified as a “transaction account”. If it was then classified as a transaction account, then why the fees? There are no fees from transfers between transaction accounts. It makes no sense to me. So we fine the customer for using saving as a transaction account, but they favor transferrers between transaction accounts and charge no fee…It makes no sense to me.
Ella says
June 6, 2019 at 8:29 pmI read one place that telephone transfers don’t count and another place they do count. Will someone answer this please