Alternate names: Excessive withdrawal fee, withdrawal limit fee, excessive activity fee
Today’s savings account withdrawal fees grew out of the Federal Reserve’s Regulation D, which stated that any account classified as a “savings deposit account” had to limit a customer’s number of “convenient transactions“ to six. Regulation D discouraged using savings accounts as checking accounts to ensure banks had enough money to meet federal requirements. In 2020, the Federal Reserve suspended Regulation D to help families access savings during the COVID-19 pandemic, with an interim rule. The new rule “allows, but does not require, financial institutions to suspend enforcement of the six-transfer limit and to allow their customers to make an unlimited number of convenient transfers and withdrawals from their savings deposits.” This means that banks and credit unions can stop charging fees but don’t have to do so. As a result, some banks are temporarily waiving all fees for exceeding withdrawal limits while Reg D is suspended. An institution might waive the fees for everyone or just for certain kinds of customers, such as students or those with a certain amount in their account. But because the fees aren’t prohibited, some banks and credit unions are still charging them, typically $1-$15, for excessive withdrawals. Banks and credit unions can make money by charging savings account withdrawal fees. The transfer and withdrawal prohibitions depend on the institution. Institutions can even limit you to two withdrawals per month, while others limit by statement cycle. Six per month is a typical savings account withdrawal limit, however.
Example of Savings Account Withdrawal Fee
For example, a savings account withdrawal fee might be $5. The bank limits you to no more than six monthly withdrawals or transfers. Suppose you accidentally make a seventh transfer after noticing your checking account getting too low. You’ll be charged the $5 fee for the mistake.
How To Avoid Savings Account Withdrawal Fees
Savings account withdrawal fees can quickly add up. Here are a few ways to avoid the fees.
Preventing transactions beyond the limitMonitoring your excess transfers and contacting youTaking away your account’s transfer and draw capacityClosing the account and moving your money to a checking account
Review Withdrawal Rules and Fees
It’s ultimately up to you to read your bank’s fine print to discover and avoid any savings account withdrawal fees. Every bank has its own rules for savings account withdrawals. Look for:
Withdrawals, transfers, and transactions: How many and what types are allowed? Time period: Per month or statement period?Fee per violation: How much will you pay if you exceed the limit?
Typically, you’ll find this information on the financial institution’s website or in the account details and fee schedule.
Switch Financial Institutions
Switch to a bank or credit union that doesn’t charge savings account fees or charges far lower fees. Remember that these institutions reserve the right to change their rules, monitor your limits, or close your account, so watch policy change notices.
Keep an Eye on Overdrafts and Transfers
Banks may let you link your checking account to a savings account for free overdraft protection. While a great opt-in feature, any overdrafts could count toward the withdrawal limits. Transfers to other accounts, either within the same bank or to another bank, also count. If you must transfer cash, plan to move money less frequently in larger amounts versus in smaller, more frequent amounts.
Switch Account Types
If you often make more than the limit of withdrawals in a month, it could be a sign that you need a different type of bank account. Or switch any automatic withdrawals (rent, utility bills) to come out of your checking account, not savings.
Third-party transfers (from platforms like Zelle or Venmo)Online banking transfersTransfers to another account at the same bankOverdraft protection transfers to a linked checking accountWithdrawals at ATMs, by phone, mail, online, or in personPre-authorized or automatic payments coming from your savings account
