Is savings account limit on number of transactions both per calendar month and per bill cycle?

Question

The Federal Reserve's "regulation D" places a limit of six withdrawals per month from a savings account:

allow no more than six transfers or withdrawals per calendar month or statement cycle of at least four weeks for the purpose of transferring funds to another of the depositor’s accounts at the same institution or making third-party payments by means of preauthorized, automatic, or telephonic transfers or transfers or withdrawals made by check, debit card, or other similar order made by the depositor and payable to third parties

(quoted from the Regulation D Consumer Compliance Handbook)

The text of the regulation itself, in section 204.2(d)(2):

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.

Does that "per calendar month or statement cycle" mean that each bank picks a rule to apply, and as long as I stay under 6 transactions in a calendar month at a bank that uses the calendar month, and 6 transactions in a cycle at a bank that uses a cycle, I'm in compliance? Or do I need to stay under 6 transactions in each calendar month, and also 6 transactions per cycle?

I opened a savings account in the middle of the calendar month, and setting up ACH links to my existing banking and investment accounts caused verification transfers (two deposits followed by a withdrawal for the sum) that took up most of my available transactions, and I'd like to know if I can perform additional transactions starting on the first of the new month, or have to wait for my statement cycle.

For my immediate situation, "bank's option and they chose to use the statement cycle" would be equivalent to "both rules apply". But in general I'd like to know whether both definitions of "month" apply to all savings accounts at all banks.

Answer 1

The simple answer is ask the bank when the cycle ends, and when they will be sending a statement.

The idea is that a savings account should not be a source of multiple withdraws in a "cycle". The regulation says a "cycle" is either a calendar month, or it is a period of time of at least four weeks long. In the days when bank statements were mailed to peoples houses, when the cycle closed a new statement was prepared and mailed. Now of course statements, if they are generated at all, are sent electronically or stored on the website to be downloaded.

It is possible that a banking institution spreads the members cycle closing day across the month, but I have not run into that situation. It is more likely that they use the end of the month, or a set day in the month to close all the cycles at once. The counter resets to zero when the cycle closes.

A similar answer is to assume you can make one more move this month, and move the entire savings account (except a required minimum balance) to checking. You can make as many moves, transfers, and payments from a checking account.

I opened a savings account in the middle of the calendar month, and setting up ACH links to my existing banking and investment accounts caused verification transfers (two deposits followed by a withdrawal for the sum) that took up most of my available transactions, and I'd like to know if I can perform additional transactions starting on the first of the new month, or have to wait for my statement cycle.

Each of the setup transactions you described (two deposits and one withdrawal) only counted as one transaction. You can make unlimited deposits into a savings account in a cycle, but you can only make six transfers out of the account.

The idea behind the regulation is that money in checking accounts is not available to be a source of loans by the bank, but a savings account is a source of funds that the bank can use for loans. They need to be able to tell the difference.

Answer 2

My experience (Ally Bank and Chase) is that it's the billing cycle.