Regulation D (FRB)
Encyclopedia
Reserve Requirements for Depository Institutions (Regulation D) is a Federal Reserve Board regulation that limits the number of preauthorized withdrawals and transfers from a savings account
or money market account. The regulation applies to all United States banking
institutions offering such accounts.
or money market accounts via several transaction methods. Transactions counted against the limit include "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." Transactions not counted against the limit include "mail
, messenger, automated teller machine
, or in person or when such withdrawals are made by telephone (via check mailed to the depositor)."
The law was amended in 2009 to allow greater freedom for the depositor: beforehand, the limit was six withdrawals per month if the funds remained within the same institution (e.g., transfer to checking), but was only three drafts where the funds left the institution (e.g., check, ACH
, or card based purchase).
The number of deposits or incoming transfers into savings or money market accounts are not limited.
Savings account
Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money . These accounts let customers set aside a portion of their liquid assets while earning a monetary return...
or money market account. The regulation applies to all United States banking
Banking in the United States
Banking in the United States is regulated by both the federal and state governments.The U.S. banking sector's short-term liabilities as of October 11, 2008 are 15% of the gross domestic product of the United States or 43% of its national debt, and the average bank leverage ratio is 12 to...
institutions offering such accounts.
Six transaction limit
In consumer banking, "Regulation D" often refers to §204.2(d)(2) of the regulation, which places a limit of six withdrawals or outgoing transfers per month from savingsSavings account
Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money . These accounts let customers set aside a portion of their liquid assets while earning a monetary return...
or money market accounts via several transaction methods. Transactions counted against the limit include "preauthorized or automatic transfer, or telephonic
Telephone banking
Telephone banking is a service provided by a financial institution, which allows its customers to perform transactions over the telephone.Most telephone banking services use an automated phone answering system with phone keypad response or voice recognition capability...
(including data transmission
Online banking
Online banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.-Features:...
) agreement, order or instruction, or by check
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
, draft
Bankers' acceptance
A banker's acceptance, or BA, is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker's acceptance specifies the amount of money, the date, and the person to which the payment is due. After acceptance, the draft...
, debit card
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...
, or similar order made by the depositor and payable to third parties." Transactions not counted against the limit include "mail
Mail banking
Mail banking is a service provided by a financial institution which allows its customers to deposit cheques into their account by mail. It is primarily used by virtual banks and by customers who live too far from a branch...
, messenger, automated teller machine
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
, or in person or when such withdrawals are made by telephone (via check mailed to the depositor)."
The law was amended in 2009 to allow greater freedom for the depositor: beforehand, the limit was six withdrawals per month if the funds remained within the same institution (e.g., transfer to checking), but was only three drafts where the funds left the institution (e.g., check, ACH
Automated Clearing House
Automated Clearing House is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit payroll and vendor payments. ACH direct debit transfers include consumer payments...
, or card based purchase).
The number of deposits or incoming transfers into savings or money market accounts are not limited.