Posted: 12/31/2009 6:48:20 AM EDT
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I know there is an "Excess Transaction Fee" on more than a certain number of withdrawls from a money market account, but has there been a rule change that banks/credit unions can charge such a fee on regular savings accounts now?
Suddenly, when I'm transferring funds from savings to checking I now get a message that after 6 transactions I'll get hit with this? And now they are charging me for Cashier's Checks, when it used to be free. I know some banks/CU's are hurting, but I didn't think mine was one of them |
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More than 6 electronic transfers and you get hit with $20/transaction. This was apparently written into some type of federal law several years ago.
I used to move money around between accounts electronically quite a bit. I started having these $20 charges show up and inquired as to why. That was the explanation I was given by the CU. |
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Banker here.
The type of account you have limits the amount of electronic or check type transactions to 6 per month. This is due to Regualtion D. This regulation has been in effect for as many years as I have been a banker (18), and certainly longer than that, but there was a change that went into effect in July of this year. See data below: Regulation D: Savings Account Transaction Limitations Effective July 2, 2009, the Federal Reserve has revised Regulation D - making the savings and MMDA account withdrawal and/or transfer limitation easier to understand. Federal regulations require banks to limit the way withdrawals may be made from a savings or money market deposit account. Withdrawals in excess of these limits may result in a fee or account closure. Customers sometimes wonder why bank accounts have different terms or pay different interest rates. One of the reasons is Regulation D: Regulation D applies to all financial institutions. It imposes uniform reserve requirements on transaction accounts or non-personal time deposits, defines such deposits, and requires reports to the Federal Reserve. The regulation establishes operating parameters for each account category, such as transaction accounts (demand deposit or checking accounts) and non-transaction savings accounts. For instance, this regulation currently prohibits the payment of interest on business checking accounts. Regulation D also places limits on the type and number of withdrawals that can be made from certain non-transaction accounts, such as savings and money market deposit accounts. Checking accounts are deemed to be "transaction accounts", and have no such transfer or withdrawal limitations. What accounts does it affect and how? Savings Accounts and Money Market Deposit Accounts: During any month, you may not make more than six withdrawals or transfers to another bank account of yours or to a third party by means of a pre-authorized, automatic transfer or telephonic order or instruction, whether initiated by check, draft, debit card, if applicable, or similar order to a third party. This includes HomeAccess online banking account transfers and bill payments. Basically, the type of account you have is not meant to be a transaction account. There are a few ways to make sure you don't get the required nastygram or fee. 1. Make only 1 transfer per week. (You will never go over 5 in a month this way) 2. Make your transfers in person. 3. Change the style of account you have. Think of having three types of money. Short term, intermediate, and long term. Also have three types of accounts. Checking, savings/money mkt, CD's and investments. Checking is for money you will use this month. Savings/money Mkt is for money you plan to use in the next 1-3 months. Investments and CD's are for money you plan to use 3+ months out. It isn't the bank that is at fault, is it the .gov. |
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It is in no way a bank taking advantage of a rule. We are required to enforce these issues, or risk being limited to opening new branches, acquiring other banks, receiving MOU's or Cease and Desist orders, where they can essentially shut us down for not following the rules. The fees and nastygrams are there to make you change your behavior. Don't like the fee or getting the letters, then change your actions. I personally think it is a stupid regulation, so I educate my clients about it and show them how to avoid that. Every good banker should do that. Happy clients = loyal clients. 90% of my business comes from referrals from existing clients, so keeping them happy and informed actually makes me money.
I also share the scoop with you guys. Good or bad, I try to keep you abreast of the real meaning behind finicial matters, not some stupid conspiracy bullshit. I am all for making money the right way, with loan fees, interest, and fair transaction fees. I don't like punitive interest rates like the major credit card companies charge (we have been at 12% fixed since 1995, with no changes), and a few other tricks that mortgage brokers pull. My suggestion is that you find a community bank or CU that suits you well. I would usually only suggest a national bank if you travel over a multi state region on a regular basis, but a relationship with a good community banker eliminates that need. If you have a financial question, I'll get you an answer. |
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Quoted:
I am all for making money the right way, with loan fees, interest, and fair transaction fees. I don't like punitive interest rates like the major credit card companies charge (we have been at 12% fixed since 1995, with no changes), and a few other tricks that mortgage brokers pull. My suggestion is that you find a community bank or CU that suits you well. I would usually only suggest a national bank if you travel over a multi state region on a regular basis, but a relationship with a good community banker eliminates that need. If you have a financial question, I'll get you an answer. How much does the bank you work for charge for this type of fee, and why that amount? |
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BECU is one of the better financial institutions around and I am pretty sure they have a similar policy in place.
IIRC it is around 6 withdrawals in a 1 month time frame. Not from checking acct's though. It is for online Savings or money market accounts. Do i like it or agree with it ? No Have I ever personally needed to do 6 or so savings / money market account withdrawals - transfers in a 30 day period ? No It seems fairly reasonable to me. |
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Dino,
It depends on the fine print in your deposit agreement. Not all money market (MM) accounts are the same. Some are glorified savings accounts, while others are MM DEMAND DEPOSIT ACCOUNTS (MMDDA). Demand deposit accounts (DDA) are checking accounts. A MMDDA is essentially a checking account that earns interest. (this is oversimplified, but should give you an idea what I mean) A bank is free to name their accounts, to a certain extent, so that is why there is a confusion between NOW (negotiable order of withdrawal) accounts, MM, and MMDDA. There are also true non-FDIC insured MM accounts which confuse the matter even more. They are all different, with different rules and regs. You likely have a MMDDA, or you don't exceed the 6 per month Reg D issue. YOPD, We charge $10. You signed an account agreement to abide by the regulations in the disclosures in your account agreement. One of these was the Reg D issue. These should have been disclosed to you, and read by you before/when you opened your account. Many folks just look for the highest rate and don't care about the rules/regs surrounding the account. They get blinded by the rate and don't care about the conditions. These are FEDERAL RULES. When a Reg D violation occurs a person at our bank has to check what triggered the violation. Sometimes it is a bank error because a check was handled in person (which doesn't count against the 6 item rule) and no notice goes out and no fee is charged, but most times it is a client generated issue. Records are checked to see if there was a previous violation, and then one of 3 progressively more sternly worded letters are written based upon previous violations. All in all, about 30-45 minutes work that wouldn't have been necessary if the client hadn't violated the deposit agreement they had signed. Do this 3 times and we change your account restricting electronic debits and check writing priveledges. We get paid for our time for enforcing the violation of a FEDERAL RULE. Does every store out there charge the same for 20 rounds of Brittish Radway (RORG) 5.56 ammo? Nope. A free market dictates what they can charge. Same with a gallon of milk, it costs different across the street. Banks are also not non-profit, yet so many people think we should be. We provide services and get paid for those services. Do you work for free? Our clients want new ways to access their money, so we develop them, making us spend money, which the client eventually pays for. Plain and simple, you violated the agreement, and a FEDERAL RULE, and you were dinged. Now if you were a client of mine and you got dinged, I'd reverse it, tell you how to avoid it, or find a better account to fit your needs. Simple as that. Your banker should do the same, or you should look for another bank/CU. There are plenty of banks/CU out there that take good care of their clients. Checking account are commodities, and they are all essentially the same. Where banks can differentiate themselves is through service. A large bank that shall go un-named lost a major depositor because a greeter would not validate the man's parking because he wasn't doing any business that day, but just parked there to see his attorney in the same bldg. He came in wearing his grubbies, and wasn't particularly clean as he had been working on his farm equipment that day. Validating the man's parking would have taken 3 seconds and cost that greeter and the bank nothing, as it was their parking lot. Not doing that cost them a few million in deposits. In this day in age, do you really want to bank with a financial institution that isn't healthy and financially stable? Best of luck. |