Why is there a limit of 6 ACH transfers per month with savings accounts?

On April 24th, 2020, the Federal Reserve Board announced an interim final rule that removes this six per month limit on convenient transfers. This was in response to the Coronavirus epidemic and the Federal Reserve appears to have made this change permanent. It will be up to banks as to how quickly they will remove the penalties and the limits (which existed only because of the Federal Reserve rule).

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!).

Table of Contents
  1. Why does this six transfer limit exist?
  2. What counts as a transfer?
  3. How to get around this limit
  4. Why the 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:

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 . . . 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, and no more than three of the six such transfers may be made by check, draft, debit card, or similar order made by the depositor and payable to third parties.

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. 🙂

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About Jim Wang

Jim Wang is a thirty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

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  1. Ryan says

    So, 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.

    • Henry says

      You are charged fees because the status of your account is still a savings account, NOT a checking account. Until the account is converted, you will incur fees for violations of Regulation D for savings accounts.

      The bottom line is that you CANNOT treat savings accounts like checking accounts and will be charged if you violate Regulation D. Savings account are not meant to be transaction accounts. Stop mixing apples with oranges.

  2. Ella says

    I read one place that telephone transfers don’t count and another place they do count. Will someone answer this please

    • Henry says

      Each bank has its own definition regarding what is considered a withdrawal as it applies to Regulation D. For example, some allow unlimited ATM withdrawals and do not count them under the six maximum limit per statement cycle. Another bank could count them under the six withdrawal limit per statement cycle. It depends on each bank own rules. Best to ask each bank directly.

  3. Peter says

    What I still wonder is how was the number settled to be at 6 instead of something like 5 or 10 per month.

  4. Jim says

    This is the stupidest thing in banking and needs to be changed. It is not customer friendly and another way to gouge the customer just like ATM transaction fees. We as consumers need top demand that profiteering stop with the greed of the institutions.

    • Henry says

      If you need to withdraw money many times per statement cycle, then a savings account is not the place to put that money. To avoid fees, either put them in a checking account or your in-home safe or mattress. By definition, a savings account is a place to put money into it, not taking it out. Taking it out means that you are NOT saving.

    • Henry says

      Note that some banks have suspended the six withdrawal limit for savings accounts on a temporary basis due to the Covid-19 pandemic. This suspension is not permanent and will likely be reinstated at a future time (assuming that the pandemic does not create a global economic depression).

  5. Nicole P says

    Question regarding transfer limits between different institutions with savings accounts on both sides. In preparation for a house payoff effort, I’ll need to transfer a large amount of cash between these accounts in order to wire the money from a preferred institution. I understand the limit in number of transfers allowed (6)…what I cannot seem to find out is if there is a limit as to how much is transferred at one time. Is there any concern going over $10,000 in this type of situation?

    • Jim Wang says

      I don’t believe there is a limit to the amount and you don’t need to worry about $10,000 – that typically refers to large cash (currency) transactions. They don’t worry about electronic transfers because there’s already a “paper” trail.

    • Henry says

      The $10,000 reporting rule for cash transactions is to detect money laundering activities. Many drug dealers and criminals handle cash in their business, so they have to deposit it by that means into financial institutions. The Treasury Department requires you to file a form to report cash transactions involving banks that are over $10,000. Wire transfers do not involve physical cash, so you are fine. The problem only is a problem when physical money bills or coins are involved. So putting in a cache of US Gold one ounce coins will require you to report it.

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