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Does returning small bank verification deposits count towards the limit of 6 monthly "convenient" withdrawals on a savings account?

Example:

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  • This would never have occurred to me. Great question. – ceejayoz Jan 24 at 21:26
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Yes - probably. Ultimately it depends on exactly how you made those transactions.

The relevant Federal rule is often referred to as Reg D and it places limits on how certain account types must be reserved for by banks.

A bank with deposits from customers is required to keep a portion of that money on-hand and available, as a way to support the liquidity of those deposit accounts (in other words, as a way to ensure that customers have access to their money). These reserve requirements vary depending on the type of account and it's intended use. Accounts that are intended to be highly transactional in nature (i.e. a checking account) have different reserve requirements than accounts that are not intended to be quite as active (i.e. a savings account, or a time deposit account).

As such, banks need a way to ensure that customers are using account types "correctly" - otherwise, the model for calculating reserves won't work well. If you have a savings account but use it as if it was a checking account (making dozens of transactions a day, for instance) that kills the effectiveness of the model.

So, besides stipulating reserve requirements, the federal government, through Reg D, also places some restrictions on how accounts can be used by consumers. The most famous is the limit of 6 transactions per month.

The rules break transactions into those that count:

  • Transfers between accounts in an online banking portal
  • Transfers processed over the phone (i.e. via calling your bank)
  • Preauthorized (scheduled) transfers, like automatic bill pays
  • Automated overdraft transfers, i.e. from your savings account to your checking account, to cover for an overdraft on your checking account
  • Check or debit card transactions (except those noted below)

And also, those that don't count:

  • Any transaction made in person at a bank's teller line
  • Any transaction performed at an ATM (i.e. moving money between your accounts or withdrawing money from a savings account)
  • Any transaction made via phone that results in an actual physical check being mailed to someone (i.e if you call and instruct your bank to make a "bill pay" check payment to a merchant they don't ACH to).

So, what is the actual implication of this 6 transaction limit? What happens if you exceed it? Ultimately, the results of going over the limit of 6 transactions per month vary significantly from bank to bank:

  • Some will basically not do anything, except maybe notify you, and maybe take action if you repeat the violation month after month after month.
  • Some will immediately begin to charge you a fee after your 6th qualifying transaction
  • Some will close your savings account
  • Some will convert your savings account to a checking account
  • Some will refuse to allow you to make any qualifying transaction after your 6th

Banks are allowed to take any of these actions once you've exceeded the limit. And, of course, banks have a lot of freedom anyways, in terms of how they manage your account - some banks will behave as if the exempt transactions actually do count (i.e. they will take action after your 6th transaction, regardless of whether or not any of them were not technically included). Although this may sound scary, banks are in the business of retaining customers, and many banks are fairly lenient on this rule.

So - ultimately - you really need to ask your bank how they handle this, even if you can determine from this list whether or not the transaction actually qualifies.

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YMMV, but it sure did for me. (There's no "small withdrawal" exception to Regulation D.)

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