Help! Saving account vs checking account

[GrandmaDede]

I want to change my linked bank account to my savings account only and not checking. Is this possible? It keeps saying the routing number is wrong; and I've tried numerous times! Help.....

[GrandmaDede]

Nevermind.... I got it online. Just type in your state!

[PattenCreations]

GrandmaDede - just be aware there is a federal law that limits the number of electronic/automatic transactions you can have via a savings account to 6 per month. I think this is why Etsy prefers the use of checking accounts.

[GrandmaDede]

Hi Deb, thats very interesting! I'll have to find more info on that.

[Former_Member]

Deb, good point. I had my pay pal account linked to a savings account, glad I already changed it to checking. Thanks for that info.

[OriginalsbyLauren]

Deb, is that something new?

[Former_Member]

According to wiki, Fed Reg D applies to withdrawals not deposits. Here's the link: http://en.wikipedia.org/wiki/Regulation_D_%28FRB%29

[PattenCreations]

This is how I know....I got a warning from my bank advising me I had just used my ONE warning for exceeding that limit. I called the bank and here is exactly what I was told. It applies to

ALL electronic transactions - deposits, withdrawals, or transfers. Whether they are automatic or you go to your online account management and do it.

We have 2 automatic electronic transactions set up every other week - a transfer from checking (where husband's paycheck goes) to savings and our mortgage payment (yes we pay every other week). So usually that is 4 in a month. But in August there were 3 paydays. So that was 6. I also made a couple of transfers via my online account management to pay property taxes and to transfer tuition money to daughter's account = 8. And BANG I got very STERN letter of warning. Asked when I was on the phone what would happen if I did it again - COULD be fined up to $25,000! However I am perfectly welcome to go TO THE BANK and have a teller make the additional transfers or use the ATM. The ATM is not considered an electronic transaction.

ETA: Lauren - it was part of the huge consumer credit bill passed in May 2011. Took effect in 2012.

[Former_Member]

Wow Deb, that must have been scary. It seems illogical for the Fed to restrict deposits. But if that's what your bank told you, then it must be true.

[PattenCreations]

And I have no idea what the rationale is. I even emailed our Congress person and asked about it as it made no sense. I mean I thought we wanted to encourage saving? Never heard back. Oh well you better believe I now only let those automatic ones go through electronically!

[Former_Member]

I've done some more research on this. Everything I read says the restrictions are on withdrawals, not deposits. Individual banks can get in hot water with the Fed for having a lesser percent of deposits liquid, not more.

Just for the heck of it, I'll call my bank tomorrow and see what they say. Not that they are the authority or anything, but just to see what they say.

It might be wise for anyone using DC and wanting to have your deposits made to a savings account to contact your bank first.

I hate conflicting information. It's one of those things that will drive me nuts.

[PattenCreations]

Interesting - as that is very different from the official notice I received.

[PinchtheMuse]

I think it is Wikipedia that says it's not deposits.

If you go dig around the Federal Reserve website it will link out to a government doc website to the regs that says both deposits and withdrawals. Along with a lot of other language about transferring to and from savings accounts to and from accounts within the same institution owned by the same depositor. I gave it three reads, but it is about clear as mud.

The overview SEEMS to be that there are savings accounts and then there are transactions accounts. If there are going to be a lot of transactions on an account then you should have a transaction account (like a checking account). It is as Nora said above...the why has to do with the requirements of how banks are required to keep cash reserves, etc...

All in all I would say get a business checking account, then you don't have to worry about it. If that isn't an option I would say each individual needs to check with their bank. The bank is the one---- that if you break their rules will convert your account off of savings (probably at cost to you) to a transaction account, for going over whatever their limits are.

[PattenCreations]

Thanks Muse - whatever the bottom line is I am sooo not doing anything electronically except those 2 automatics anymore! (and I do have a business checking account)

[collageOrama]

My savings account gets about 40 deposits a month. I have a daily regular deposit from my checking, and my bank also does a daily 'Keep the Change' thing where it rounds up any purchases and throws the excess into savings.

The savings account limits should only be on ACH transfers out of the account. It's possible your bank counts ACH deposits the same as ACH withdrawals. I've never heard of that before, though, and it doesn't really make sense. If they're getting their panties in a twist over deposits, I'd start looking at another bank.

Also, see:

http://en.wikipedia.org/wiki/Regulation_D_(FRB)

[Former_Member]

There is a limit to the number of withdrawals to a savings account. Just like Deb said ..... 6.

There should be no limit to the amount of deposits to your savings account... Banks like for you to deposit as much or as many times as you would like. but frown upon too many withdrawals. There can be up to a $15.oo fee if the amount of with drawals are exceeded (government rule)

If you do keep having excessive withdrawals then they will automatically convert it to a checking account.

[Former_Member]

Thank you for this informamation. I didn't know about the restrictions on withdrawals in a saving account. We use a checking account for all our Etsy deposits and withdrawals.