Protecting Your Accounts from Federal Regulation D Penalties
Federal Reserve Regulation D requires financial institutions like banks and credit unions to maintain sufficient cash reserves to cover anticipated cash transactions. To that end, Regulation D requires financial institutions to set limits on certain types of withdrawals from non-transaction accounts. At Tech CU, our transaction accounts are Checking and Interest Checking. Our non-transaction accounts are Savings, Insured Investment and Money Market Plus Accounts. A Certificate Account is another type of non-transaction account where you agree that the deposited funds will remain in the Certificate for a set term.
In general, a transaction account is one designed for frequent withdrawals of money without penalty. Withdrawals are also allowed from non-transaction accounts (other than Certificates), but certain types of withdrawals, which Tech CU calls “non-personal withdrawals,” are limited to six per month. Non-personal withdrawals include withdrawals by Automated Clearinghouse (ACH) transfer, automatic transfer to another account, Online Banking transfer, Call-24 transfer, transfer initiated by telephone call with a Tech CU representative, overdraft protection transfer, check written on Money Market Plus Accounts, and point of sale (POS)/Debit Card payment transaction. If funds are withdrawn from a Certificate Account before the end of the term, they will generally be subject to a set monetary penalty that will be disclosed to you when you open a Certificate Account.
Remember: Your Tech CU Debit Card is not a credit card. If you use it to make a purchase that exceeds available funds in your Checking account and have authorized Tech CU to make overdraft protection transfers from your Savings, Insured Investment or Money Market Plus Account, the overdraft protection transfer counts toward the six-per-month limit on non-personal withdrawals.
If you have reached your six-per-month limit, any purchases that would normally be covered by your non-transactional overdraft account could be subject to non-sufficient funds fees.
Personal withdrawals from non-transaction accounts are not subject to Regulation D withdrawal limits. Personal withdrawals include transfers or withdrawals performed in person at a Tech CU Branch, cash withdrawals or transfers completed at an ATM, or withdrawals or transfers requested by mail.
If you exceed the limits on non-personal withdrawals out of non-transaction accounts, Tech CU may be required to close the non-transaction account.
How to avoid Regulation D penalties
- Option #1: Maintain a higher balance in your Tech CU Checking account. Tech CU’s Basic Checking and Interest Checking both offer an unlimited number of deposits and withdrawals.
- Option #2: Establish an overdraft protection source that is not subject to Regulation D transaction limits, such as a line of credit.
- Option #3: Set up Alerts through Online Banking. You can elect to receive an Alert when you have reached a set number of non-personal withdrawals out of non-transaction accounts.
For more information about Regulation D, please feel free to contact a Tech CU representative at one of our Branches or call our Contact Center at (800) 553-0880.