Essential Insights from a Banking Expert: Understanding Savings Account Withdrawal Limits
Many people suggest getting a savings account to keep your money safe and easily accessible. While a lot of Americans have either a savings or checking account, about 5.9 million households don’t have any bank account at all, according to the FDIC.
If you already have a savings account or are considering opening one, it’s crucial to pick a bank that fits your needs and to understand the account’s limits and restrictions. Whether you choose a traditional bank, a credit union, or a digital bank, be aware that savings accounts often have withdrawal limits. Here’s what you need to know about these limits, based on insights from banking experts Dan Kroytor and Gates Little.
**Banks Limit Free Withdrawals**
Savings accounts are generally more accessible than certificates of deposit (CDs) or other investment accounts because they allow you to withdraw or transfer money to your checking account as needed. Transfers are usually quick, often happening immediately or within the same day. However, savings accounts typically limit the number of free withdrawals or transfers you can make each month.
Most savings accounts restrict the number of withdrawals or transfers you can make each month without incurring fees or penalties. Federal regulations usually set these limits, with the standard being six withdrawals or transfers per statement cycle for U.S. savings accounts. Exceeding these limits can result in fees or your account being converted into a non-interest-bearing account.
**Transfer Limits Can Vary**
In 2020, the Federal Reserve removed the six-per-month transfer and withdrawal limit, but banks are not required to follow this change. Many traditional and high-yield savings accounts (HYSAs) still maintain this limit. However, each bank can set its own rules. Some banks offer savings accounts with unlimited, penalty-free transfers, while others, especially those with higher yields, may have stricter limits on outgoing transfers or withdrawals.
Regardless of the bank, they must comply with the Truth in Savings Act’s Regulation DD, which requires them to disclose account fees and limitations before you open the account. Always review the terms and conditions carefully to understand what you’re signing up for.
**NSF Fees in Savings Accounts**
Non-sufficient funds (NSF) fees occur when you don’t have enough money in your account to cover a transaction. If you have an automated bill payment but insufficient funds in your savings, the bank will charge you a fee once your account is recharged. These fees can add up quickly, especially if you frequently withdraw from your savings account, increasing the likelihood of incurring this fee at least once.