Watch your online banking usage wrt savings accounts

Post #262,157

7/19/06 11:28:46 AM

So I went to my online banking web site today and happened to check out my Savings Account activity. I saw a fee on my account labeled "ADDITIONAL WITHDRAWAL FEE". Being curious about where my money was going, and what the purpose of this fee was, I called my banking representative.

She merrily informed me that United States Federal Law limits the number of pre-authorized transactions that can be made in a single month/billing cycle from a Deposit Account (such as my savings account) to six. This is known as Federal Reserve Regulation D, or 12 CFR 204.2(d)(2). I was able to find some highly legalistic text on this regulation [link|http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2001/janqtr/12cfr204.2.htm|here].

Among the more interesting tidbits is this:

\\4\\ In order to ensure that no more than the permitted number of withdrawals or transfers are made, for an account to come within the definition in paragraph (d)(2) of this section, a depository institution must either:

(a) Prevent withdrawals or transfers of funds from this account that are in excess of the limits established by paragraph (d)(2) of this section, or

(b) Adopt procedures to monitor those transfers on an ex post basis and contact customers who exceed the established limits on more than an occasional basis.

For customers who continue to violate those limits after they have been contacted by the depository institution, the depository institution must either close the account and place the funds in another account that the depositor is eligible to maintain, or take away the transfer and draft capacities of the account.

An account that authorizes withdrawals or transfers in excess of the permitted number is a transaction account regardless of whether the authorized number of transactions are actually made. For accounts described in paragraph (d)(2) of this section, the institution at its option may use, on a consistent basis, either the date on the check, draft, or similar item, or the date the item is paid in applying the limits imposed by that section.

Reading that, it authorizes your banking institution to automatically switch your savings account to (for example) a checking account if you consistently violate this regulation.

An example of a pre-authorized transaction is an online transfer (banking through your bank's website) from your Savings Account to your Checking Account. If you were to go to an ATM, or your local branch, to transfer money from the same Savings Account to the same Checking Account, however, that's not a pre-authorized transaction, and does not count against this limit.

I was surprised to find this bit of information out. Perhaps the rest of you knew about it, but just in case...

-YendorMike

"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."
- Benjamin Franklin, 1759 Historical Review of Pennsylvania

Post #262,159

by drewk

7/19/06 11:47:00 AM

"Additional Fee" Fee

This Fee is being charged because you have exceeded the number of Fees typically assessed in a single billing cycle. This Fee will be re-assessed every five[5] days until the end of the billing cycle in which is is first assessed, or until the number of Fees assessed in the billing cycle drops below the standard number of Fees for this type of account in one billing cycle.

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Post #262,160

by boxley

7/19/06 12:09:03 PM

yup, they charge fees then close

savings accounts are to be one way transactions.
thanx,
bill

Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free american and do not reflect the opinions of any person or company that I have had professional relations with in the past 50 years. meep

Post #262,165

by Andrew Grygus

7/19/06 12:40:21 PM

Nitrozac covered this subject a few days ago.

You'll find there's [link|http://www.geekculture.com/joyoftech/joyarchives/845.html|No Escape].

[link|http://www.aaxnet.com|AAx]

Post #262,166

by imric

7/19/06 12:47:11 PM

It's getting to the point

Where it's not worth it to keep money in the bank. Cash everything, and keep it in mason jars buried in the yard.

The interest is better, and it's probably safer.

Imric's Tips for Living

Paranoia Is a Survival Trait
Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
Even though everyone is out to get you, it doesn't matter unless you let them win.

Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.

Post #262,253

by static

7/19/06 11:17:57 PM

Interesting societal difference.

I had mildly wondered for the longest time why Americans loved their 'checking' accounts. Now I know: that's the common-or-garden-variety bank account!

In Australia, the bog-standard back account is called a 'savings account'. Financial institutions often add frills to these, such as ATM cards, but that's still the basic account. We don't, AFAIK, have a legal limit to the transactions. By contract, people only normally get a cheque account when they want to be able to write cheques. And up until a few years ago, you paid a government tax on every cheque written and on every transaction into a cheque account. So people preferred non-cheque accounts.

Wade.

"Insert crowbar. Apply force."

Post #262,257

by Another Scott

7/19/06 11:51:58 PM

Thanks for the info. It applies to credit unions too.

It's certainly confusing text. :-(

My CU says:

Transfers. You may make funds transfers to other accounts of yours as often as you like. However, transfers from a savings or a money market account will be limited to a total of six (6) in any one month. You may transfer or withdraw up to the available balance in your account or up to the available credit limit on a line of credit at the time of the transfer, except as limited under this Agreement or your deposit or loan agreements. The CU reserves the right to refuse any transaction that would draw upon insufficient or unavailable funds, lower an account below a required balance, or otherwise require us to increase our required reserve on the account.

I guess it makes some sense, since savings accounts are government insured (I guess they don't want people churning them).

It looks like if one needs to move money out of an account frequently, it needs to be a checking-type account.

Thanks.

Cheers,
Scott.

Post #262,270

by scoenye

7/20/06 7:09:55 AM

In English, and there's another landmine hiding too...

[link|http://www.federalreserve.gov/boarddocs/legalint/FederalReserveAct/1996/19961101/|http://www.federalre...ct/1996/19961101/]

However, assuming that your concern is whether instructions from a third party, such as Checkfree, to the depository institution are subject to the three transaction limit or the six transaction limit, the answer is that they are subject to the three transaction limit.

So there's an even better fee opportunity in there somewhere.

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