topic Re: What's the deal with 6 transfers a month? in Personal Finance

What's the deal with 6 transfers a month?

Anonymous — Sun, 09 Oct 2016 04:58:40 GMT

I get that it's Federal Law and banks need to follow it but the month has barely started and I was getting close to my limit with my online money market account (thanks to Alliant and NFCU) so instead of setting up a transfer I went to my credit union, used the ATM, and deposited cash. ATM withdrawls don't count against the limit with this account.

Re: What's the deal with 6 transfers a month?

Anonymous — Sun, 09 Oct 2016 08:07:50 GMT

I bet nobody on this board can say for sure, but I think it has something to do with how banks operate and this is just a guess really.

As you might or might not know, banks take money in people's savings, put it into a "pool" and then relend it at a higher rate while paying you a much lower rate in interest. If you really think about it, banks are regulated (although not enough, but that's another topic) by the federal government and need to keep a strict record on the money they lend out, to who, and how much they have in their reserves since banks need a certain percentage of their profits and savings used as a "cushion" to lend to everyone who does business with them. The government also wants to know what the banks are doing with your savings so they don't gamble it away and then don't have the funds to return your money when you want to withdraw it. The money banks use from savings in a money market account is used differently than money used in a traditional savings account for example.

If you're constantly withdrawing money more than once a week out of your savings account, the bank has a harder time keeping track of that information. You're also constantly shifting the banks' ability to lend money out to other people since it helps create uncertainty in how much money they have to lend out. Remember, you're not their only customer so times those 6+ withdrawls by millions of people and you'd see how it's difficult for the government to watch your money and how it's difficult for the bank to determine their underwriting criteria and ability to lend based on a sum of money that's constantly shifting downwards.

I guess if you understood what I said, I know I can be confusing sometimes, but it's to create stability in their lending practices, and it's also to make it easier for the bank and government to keep track of records for lending out that money.

Re: What's the deal with 6 transfers a month?

pipeguy — Sun, 09 Oct 2016 13:44:15 GMT

The 6 transfer rule has to do with Money Market Funds and those accounts banks link to Money Market Funds - its a SEC Rule and Federal Reserve Regulation D rule.

https://www.sec.gov/spotlight/money-market.shtml

https://www.federalreserve.gov/bankinforeg/regdcg.htm

Re: What's the deal with 6 transfers a month?

Anonymous — Mon, 10 Oct 2016 00:55:08 GMT

The rule has to do with any form of savings accounts. Only allowed 6 online transactions per month.

Two ways around it if you have reached the 6 transaction limit. Go into a branch to make your transaction or use a ATM.

Resets the first of each month.

Re: What's the deal with 6 transfers a month?

Anonymous — Wed, 12 Oct 2016 05:26:03 GMT

You could still be charged a fee for doing it I'm branch.

Re: What's the deal with 6 transfers a month?

UncleB — Wed, 12 Oct 2016 19:12:18 GMT

@Anonymous wrote:
You could still be charged a fee for doing it I'm branch.

As long as you do it in person at a branch or at an ATM you're fine when it comes to Reg. D, of course there could also still be fees unrelated to Reg. D depending on the account type.

From Wikipedia:

Regulation D does not emplace the six-time transfer limit on outbound savings or money market account transactions initiated in person, via messenger or mail; over-the-counter (OTC) withdrawals and transfers, ATM withdrawals and transfers, or installment loan repayments.

https://en.wikipedia.org/wiki/Regulation_D_(FRB)

What always throws me off is how many banks will use the term "month" and "statement period" interchangeably, but for many savings accounts a statement is only generated quarterly. The actual government language seems to refer to 'month' in any case, though... so far this has been the case for me even with my bank's ambiguous language.