You learn something new everyday:Electronic Banking

[atszyman]

Lesson Learned:
Due to Federal Regulation D(link is a google search) you are limited to no more than 6 electronic transfers from a savings account in a one month period. This includes online banking transfers and automatic overdraft protections.

How it was learned:
The past 2 months have been very hectic with an unplanned trip out of town due to a death in the family and the growing ever closer arrival of our second daughter (at least the sonogram person seemed darn sure the baby is a girl). So our Quicken has not been the most up-to-date with the banking.

We have a hefty reserve in our savings account so I wasn't concerned about paying bills and making sure the money was there since in the past the overdraft protection has reliably moved money from savings to checking when needed and we could sort out the transfers later.

Of course our 7th overdraft protection transfer in March would have to be a credit card payment. There was substantially more in savings than what the check was for but due to Federal regulation it couldn't transfer and it looked (as of last night) like it was going to rack up ~$100+ in overdraft/late fees. due to being good bank customers we're getting some of the fees waived on that end and I'm going to talk to the CC company tomorrow to see if we can't get some leeway there.

I'm sure some have already run into this before but I thought it might be a good piece of information for people who might not pay attention to balances closely due to overdraft protection in combination with a decent savings account. It could be a potentially expensive lesson if life gets hectic and you rely on the overdraft protection to simplify things while life sorts itself out.

 

[johnee]

didn't know that, and it sucks. What are they trying to prevent, malicious money transfers?

 

[mkrishnan]

E*Trade has always seemed to hint that this rule also has something to do with accounts that allow for checks, etc, to be written from them but are also interest bearing. It turns out that I use my quota up on my rent payment, my car insurance, my electronic payment for my credit card, and a couple of bills that cannot be put on a credit card (or maybe I need to re-investigate this). A couple of times I have gotten nastygrams for running over because I used Paypal.

 

[Coolnat2004]

This doesn't affect those under 18, right? My bank says it doesn't charge fees to anyone under 18.. and I've had quite a few transfers from my savings this month..

 

[atszyman]

didn't know that, and it sucks. What are they trying to prevent, malicious money transfers?

According to what I've briefly read of the regulation it has something to do with banks keeping some sort of minimum monetary reserve, although I'm unclear as to how the number of transactions has any effect on how much they have in reserve.

This doesn't affect those under 18, right? My bank says it doesn't charge fees to anyone under 18.. and I've had quite a few transfers from my savings this month..

It doesn't seem to say anything about ages involved. You may not have a fee from your bank involved but if you hit more than 6 the money might not automatically transfer and whomever tries to cash/deposit a check after that could be in for the fun of bounced checks and it could end up costing you on their end, however being under 18 you probably don't have a lot of credit card and other bills to pay that would roll the fee back to you.

This does not affect transfers done via ATM or teller. Only automatic overdraft and other automated withdrawals, talking with the bank today they made it sound like all online transfers are subject to this rule as well but I don't buy that, I'm sure I've had months where more than 6 transactions have taken place when the online transfers and overdraft protections are combined so it may only affect the automated/pre-authorized transactions.

Edit :Looked at some of the messages from my bank and found that they have this applied to phone and internet transactions. ATM, teller, and written requests can be used in an unlimited fashion.

 

[brassplayersrok]

Hope all works out for you. Please do tell the ending. I'm curious


Alex

 

[dornoforpyros]

ahh yes, gotta love being told you how you can and can't spend your money eh?

 

[atszyman]

ahh yes, gotta love being told you how you can and can't spend your money eh?

I was LIVID last night. Every other time I've had an overdraft it was covered fine and we had a lot more in savings than was required to cover the check. I was ready to switch banks and go somewhere where they might charge the fee for that 7th transfer but at least transfer the funds to avoid bouncing the freaking check...

Then I talked to them and found out about a relatively stupid Federal regulation that would hit me no matter where I went and the fact that they refunded the fee they charged. They made me moderately happy with them again. Which is good since they have good mortgage rates that might call for a re-finance in the near future.

Tomorrow's quest is to see which fees have been charged by the CC and whether or not I can get any refunded. Although it looks like we might be getting by without late fees and finance charges at the moment so this may have been a fairly cheap way to learn this lesson, and hopefully this thread will keep others from learning it the hard way.

 

[MongoTheGeek]

ahh yes, gotta love being told you how you can and can't spend your money eh?

Its not your money. Its the governments money. They are just letting you use it.

 

[dornoforpyros]

Its not your money. Its the governments money. They are just letting you use it.

oh well that's much more comforting...

 

[adk]

Sorry to piggyback your thread, but I have a similar question:

When I electronically transfer funds from my online savings account to my checking account (two separate banks) why does the money disappear for three days? Is this not the day and age of everything being instant? It can't possibly be due to technological shortcomings.

 

[brassplayersrok]

i think that has something to do with the banks having to make sure you're a member of both, and that you actually have the money in your account, even though it shows you do. just a safe guard i think


alex

 

[cayley]

i think that has something to do with the banks having to make sure you're a member of both, and that you actually have the money in your account, even though it shows you do. just a safe guard i think


alex

Also works out well for the bank... they get to collect the interest on those days.

 

[n-abounds]

I believe the rules for withdrawals are for all savings accounts. I think it's the Fed wants you to actually use them to save- otherwise get a checking account. And checking accounts cannot have these rules on them (but technically interest-bearing checking accounts aren't checking accounts at all...they're something else...NFSs?)

 

[Abstract]

Its not your money. Its the governments money. They are just letting you use it.

They say that, but come on.....that's kind of silly.

 

[jeremy.king]

You can get around this by using a credit line as overdraft protection, and then having the credit line tap your savings account(s) for payment. There is no limit on the number of overdraft withdrawals from a credit line. Obviously, the key here is to pay the credit line in full when its due to avoid any interest.

 

[iKwick7]

I did not know this. I pay all my bills online (except for rent, stupid paper check!). Do all these bills count as part of that 6 transfers allowed?

For example, I pay my credit card bill online using my checking account and my cable bill online using my checking account. Are those considered "transfers" or is it only if I were to actually transfer money from one account to another?

 

[swiftaw]

I did not know this. I pay all my bills online (except for rent, stupid paper check!). Do all these bills count as part of that 6 transfers allowed?

For example, I pay my credit card bill online using my checking account and my cable bill online using my checking account. Are those considered "transfers" or is it only if I were to actually transfer money from one account to another?

If you read the OP the 6 transfer limit applies only to savings accounts. You can transfer as often as you like from your checking account.

 

[yellow]

Lesson Learned:
Due to Federal Regulation D(link is a google search) you are limited to no more than 6 electronic transfers from a savings account in a one month period. This includes online banking transfers and automatic overdraft protections.

Yep.. learned that the hard way. My wife and I went to get some cash out of our joint savings account. Imagine our surprise when we discovered that the account was suddenly not available?! They had closed our account without even notifting us.. well, the letter arrived 5 business days later. Thanks Wachovia.

 

[atszyman]

Well most of the situation is now resolved and what could have been ~$100+ looks like it will only cost us $29 for the fee from the CC company. It looks as though we aren't getting hit with a late fee or finance charges (yet). Of course we've now paid the CC twice due to the automatic reapplying for the funds after I had transferred money to cover an electronic payment on Monday. Now both payments have gone through.

New lessons are often learned hard especially when they have to do with Federal regulations that make absolutely no sense.

Now to go look at re-financing the house.

 

[Rodimus Prime]

Well most of the situation is now resolved and what could have been ~$100+ looks like it will only cost us $29 for the fee from the CC company. It looks as though we aren't getting hit with a late fee or finance charges (yet). Of course we've now paid the CC twice due to the automatic reapplying for the funds after I had transferred money to cover an electronic payment on Monday. Now both payments have gone through.

New lessons are often learned hard especially when they have to do with Federal regulations that make absolutely no sense.

Now to go look at re-financing the house.

tell you the truth they do make some sense. Banks are required to keep like 20% of the money in their accounts available to the customers. the rest of it the bank can do with as they please (like give it out as loans, invested it ect.) and if saving account could be dip into very quickly electronic it could take to much money from what they invest and they would drop lower. Saving account are general though of to be a stable and not really have money taken out of them. If they where treated like checking account banks would be having issues.

 

[Teh Don Ditty]

Ahhhh Reg D. How I love thee.

The reason why money takes 3+ days to clear is because they banks want to make sure that the funds are good and they want to play the float game.

The Float Game: For example if you deposit say a $1000 local (see in state) check on Monday. It will take 2 business days to clear. $100 will be cleared immediately for use. $500 by Wed and the remainder on Thrusday. Now you're saying that's more than 2 days. Never count day of deposit. So Tuesday and Wednesday are the 2 full clearing days.

Now you says what about Check 21? Where your checks are supposed to be cleared immediately, if not in one day. They clear just fine, its just the bank holding (floating) your money so they can basically make money off it. This comes in handy when you've become overdrawn (and don't have an OD acct). Hence, they charge you $30 per item and make money off that too.

</End bankers comments>

EDIT: As somebody mentioned, an overdraft account is good only if you can pay it off in one shot. Otherwise that 18% interest adds up quickly, and banks love when you do that.

 

[atszyman]

tell you the truth they do make some sense. Banks are required to keep like 20% of the money in their accounts available to the customers. the rest of it the bank can do with as they please (like give it out as loans, invested it ect.) and if saving account could be dip into very quickly electronic it could take to much money from what they invest and they would drop lower. Saving account are general though of to be a stable and not really have money taken out of them. If they where treated like checking account banks would be having issues.

But limiting the number of transactions seems like a rather idiotic way of going about keeping cash reserves. I can drain my savings in 1 transfer, why do they limit it to 6 transfers? Why not have a requirement that no more than 80% of a savings account can be transferred in a Calendar month? This would keep the money there and avoid any issues when people might forget to enter a check or two and end up getting a bunch of overdraft protection withdrawals for tiny amounts.

If you have $15,000 in savings and you normally skirt the line on your checking (since savings earns some interest while checking does not) and you forget to enter a $100 check. Let's now say you run a bunch of errands that day and write 10 checks for $15 or less. Now with regulation D you're going to end up getting hit with a bunch of charges for that last 3 checks of less than $15 and probably end up spending more in fees than the $100 you missed entering.

I can understand a regulation on banks keeping money available but the implementation here is very poor.

 

[Teh Don Ditty]

You do realize that you are talking about the Federal Government right? That usually answers all questions.

It's boderline impossible to change Federal Regulations and you do bring up some good points.

May I suggest keeping a little more money in your checking account or perhaps open a checking account that gets some interest (I'm not talking about a Money Market, and by some interest I mean like .4%).

Stop writing checks!!!! Use the debit card. That way Overdraft charges come in one lump sum rather than one at a time. (That's how the bank I used to work at did it)

 

[atszyman]

You do realize that you are talking about the Federal Government right? That usually answers all questions.

It's boderline impossible to change Federal Regulations and you do bring up some good points.

May I suggest keeping a little more money in your checking account or perhaps open a checking account that gets some interest (I'm not talking about a Money Market, and by some interest I mean like .4%).

Stop writing checks!!!! Use the debit card. That way Overdraft charges come in one lump sum rather than one at a time. (That's how the bank I used to work at did it)

Hey, I usually keep good track of the checking account and in the 8 years I've been banking at this institution I've only run into this once. I've had a hectic couple of months and lost track of what was going on down to the penny, but knew I had enough in savings to keep everything afloat until things calmed down enough to catch up.

I only write about 4 checks a month, everything else is done via the internet or automatic bill pay and most of that is done to our main credit card to cash in as many frequent flyer miles as we can per year. So the Checks consist of a couple of Credit cards (although this one is now set up online) and our city water bill. If I could I'd get everything paid on the one CC and just pay them once every month but unfortunately not everything takes CC yet. It just happened these past months that the February's ending bills cause a few transfers along with the end of March's bills and transfers came through at various times and the Debit card could very well do the same thing as money for purchases gets yanked at various times depending on how the bank processes it.

What I find really infuriating is that I could sit at an ATM and transfer my entire savings $1 at a time to my checking every month and that's fine, but if I log on to the internet and do more than 6 absolutely identical transfers I can't do it. I know I'm expecting too much from the Federal Government but you sometimes wish they'd hire one person with common sense to look over the regulations before they apply them.

I'd rather not pay the $29 fee to the CC but considering that's at least $70 less than the worst case I had calculated on Monday night I guess I can't complain too much.