By Sabrina Karl
The COVID-19 pandemic has altered our world in countless ways, including many changes surrounding savings, investing, and borrowing. If you hold a savings or money market account at a bank or credit union, you may have noticed a significant rule change there.
Prior to the coronavirus, the Federal Reserve’s Regulation D limited how many times consumers could move money out of a savings or money market account each month, capping it at six per monthly statement cycle. This applies to both banks and credit unions.
As a result, most financial institutions charge a fee when withdrawals exceed the limit, to help discourage customers from breaking the Fed rule. If a consumer violates the limit repeatedly, some banks will close the account.
But in a move to help make access to cash easier for Americans who might be struggling financially during the pandemic, the Fed in April completely removed the maximum withdrawals limit.
That’s not to say, however, that your bank or credit union is necessarily erasing the requirement from its own rules. The Fed change only indicates that financial institutions are no longer required to enforce a withdrawal limit. Whether they still do is up to them.
Fortunately, with many institutions taking multiple measures to support their customers during COVID-19, many are indeed following the Fed change and waiving excessive withdrawal fees.
But if wanting to take money out of your savings more than six times per month is something you need or want right now, it’s wise to check specifically whether your financial institution is following the new Fed leniency. If not, it’s worth asking for an exception.
No one knows whether this Fed change will be permanent, including the Fed. But at the current time, they’ve indicated there are no specific plans for bringing the limit back.