Savings accounts sometimes have withdrawal limits, such as no more than six outgoing transactions per month. That’s because savings accounts are fundamentally different from checking accounts, which are designed for everyday spending.
Because money in a savings account is meant to primarily stay put and be added to, it earns interest. Checking accounts, on the other hand, generally offer no interest or a nominal interest rate, as it’s constantly flowing in and out. Due to this distinction, there are sometimes withdrawal limits on savings accounts.
Here, you’ll learn more about savings withdrawal limits, why they exist, when they are applied, and how you might be able to avoid them.
How Many Times Can You Withdraw From Savings?
“How many times can I withdraw from savings?” is a common question. To help maintain the distinction between checking and savings accounts (and encourage people to save money), bank accounts traditionally come with savings account withdrawal limits. A federal rule called Regulation D used to limit certain types of transfers and withdrawals — known as “convenient transactions” — from a savings deposit account to no more than six a month.
That changed in April 2020, when the Federal Reserve removed the requirement that banks enforce the limit. However, many banks and credit unions have kept restrictions in place. They may charge a fee, transition your account to a checking account, or close it if you go over that amount.
💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
Why Is There a Savings Withdrawal Limit?
Savings account withdrawal limits stem from Regulation D, mentioned above, which is a federal regulatory rule that sets standards for how banks and credit unions oversee savings deposits. But why are these guardrails in place? Some points to know:
• One of the main reasons Regulation D exists is to ensure that banks and credit unions have the necessary amount of cash on hand to always cover customer withdrawals.
• When you deposit any amount of money in your bank account, the bank uses most of that money for other things, such as consumer loans, credit lines, and home mortgages. (They most likely loan that money at a higher rate than the interest rate they pay you, the savings account depositor. That’s one of the ways banks make money.)
• Banking institutions, however, face a legal requirement to have cash available to service customers. Withdrawal limitations help protect both banks and consumers.
• One of the other motivations for Regulation D is to encourage consumers to see their transactional accounts and savings accounts as separate.
• A savings account ideally encourages long-term savings, whereas checking accounts enable short-term spending. In some cases, these limitations can help motivate consumers to prioritize saving overspending.
Get up to $300 when you bank with SoFi.
Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!
Recent Changes in Savings Account Withdrawal Rules
Because of the financial strain caused by the coronavirus pandemic, the Federal Reserve altered the rules regarding Regulation D in April 2020. Currently, depository institutions have the ability to suspend enforcement of the six transfer limit.
As you’ve learned, in the past, Regulation D was in place and enforceable in order to limit the number of transactions flowing out of savings accounts. This encouraged bank customers to keep money in savings accounts, hopefully save for their goals, and allow banks to use the funds on deposit, confident that the money wouldn’t constantly be flowing in and out.
Now, however, financial institutions can allow their customers to make an unlimited amount of convenient withdrawals and transfers from their savings accounts. The word “can” is important here.
Just because banks aren’t required to follow the six transaction limit anymore, however, doesn’t mean they won’t continue to penalize the account holder for going over that limit.
Many banks still enforce caps on the number of convenient transactions customers can make from their savings accounts.
It can be well worth your while to check in with your financial institution and find out what policies are in place regarding savings withdrawal limits.
💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.
Which Transactions Apply to the Cash Withdrawal Limit?
Only “convenient transactions” count towards the monthly withdrawal and transaction limits that consumers face when managing their savings account. But what exactly are convenient transactions?
Regulation D sees these types of transactions as convenient transfers:
• Overdraft transfers
• Automated clearing house (ACH) transfers, such as bill-pay
• Electronic funds transfers (EFTs)
• Transfers made by writing a check to a third party
• Debit card transactions
• Transfers or wire transfers made by phone, fax, computer, or mobile device.
Which Transactions Don’t Count Toward the Withdrawal Limit?
While the six transaction limit per month can sound fairly strict, it does not mean account holders can’t access their savings accounts more than six times a month.
Whatever type of savings account you have, there are less-convenient transfers you can make that do not count towards the monthly limit. These include:
• Withdrawals or transfers made in-person at the bank.
• Transfers and withdrawals made at the ATM.
• A withdrawal made by asking the bank to send you a check.
Recommended: ATM Withdrawal Limits
As mentioned above, Regulation D defines convenient transfers to include such transactions as:
• Transfers, whether by check, electronic funds transfer, overdraft, or other means.
• ACH transfers
• Payments made with your debit card.
What If I Go Over The Savings Withdrawal Limit?
The penalty for exceeding the cap set by your bank for savings transactions will depend on your institution.
You may be charged a fee, and even if your financial institution charges a low (or no) fee for exceeding the cap on transactions per month, you may still want to watch how many withdrawals or transfers you make.
The reason: If there are excessive withdrawals from a savings account, financial institutions have the right to convert the savings account into a checking account or even close the account.
Savings Withdrawal Limit Fees
If you are charged a fee for too many convenient transactions, it might be called a “withdrawal limit fee” or “excessive use fee.” These fees tend to run anywhere from $1 to $15 per transaction.
In some cases, you might ask your bank and see if they would waive the fee.
3 Tips to Avoid Hitting Withdrawal Limits
If your financial institution does have withdrawal limits, here are a couple of ways to avoid fees.
Use Your Checking Account
One simple way to avoid overstepping savings account withdrawal limits, is to use your checking account for most of your transactions.
It can be easy to get your accounts mixed up when you are banking online or in an app. By learning which account is which as you transfer funds, you can minimize use of your savings account.
Do a Single Large Transfer to Checking
If you think you will need to use your savings account to make more than six (or whatever your bank’s current transaction limit is) in a given month, consider making one substantial transfer from savings to checking at the beginning of the month.
You can then arrange to have your withdrawals or automatic bill payments taken right out of checking.
Try Work-Arounds If You Get Close to Your Limit
If you are already at your limit, you can avoid penalties by visiting the bank in person or using the ATM to initiate withdrawals or transfers from your savings account. (You may want to make sure, however, that you’re not triggering any out-of-network ATM charges.)
💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.
Opening a Bank Account with SoFi
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
How much can you withdraw from your savings account?
Individual banks set limits about withdrawals, both the number and the amount, often according to method (such as ATM withdrawals). Check with yours to learn the specifics.
Why can you only withdraw 6 times from savings?
Regulation D set the number of convenient transactions out of a savings account at six to encourage people to save and to leave their funds in the account, earning interest. The bank, in turn, could count on having a significant amount of those funds to use in their business activities.
Can banks stop you from withdrawing money?
Your bank account can be frozen, which will stop you from withdrawing money. Your bank may do this if they think illegal activity is occurring, or if a creditor or the government requests it.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.