What You Should Know About Regulation D
SCCU's Membership Account Disclosure, which is given to each new member upon joining, advises of the limitations imposed by Regulation D. This article serves to clarify some general questions regarding this Regulation. Should you have specific questions, contact our Member Service Center at (321) 752-2222 or (800) 447-7228, option 5. Or, email firstname.lastname@example.org.
What is Federal Regulation D?
Regulation D is a directive of the federal government that requires financial institutions to keep track of transactions on deposit accounts (i.e., Savings and Money Market accounts), and it sets a limit on the number of transactions that can be made each month on these accounts, also known as non-transaction accounts. The Regulation was implemented by the Federal Reserve System to ensure that financial institutions maintain adequate reserves for the funds they have on deposit. Although Space Coast Credit Union is financially sound, it is still required to comply with this Regulation.
How does Regulation D affect you?
It limits the number of pre-authorized, automatic or telephone transfers or withdrawals you can make from your Savings or Money Market account to no more than six (6) per month*. Regulation D applies to all interest or dividend bearing savings deposits such as passbook savings, statement savings, share accounts and money market accounts. The Regulation also limits the number of checks you can clear on a Money Market account each month to three (3).
Which types of transactions does Regulation D limit?
In general, any combination of the following cannot exceed six per month:
- Pre-authorized automatic transfers (ACH) to a third party (other than SCCU)
- Overdrafts to Checking
- Funds transfers made through CALL-24 or Online Banking to a third party (other than SCCU)
Which types are NOT limited?
- Transfers you handle in person, by mail or through an ATM
- Transfers by telephone, only if check is being mailed to you (authorized with your signature by fax or letter)
- Automatic transfers to repay an SCCU loan on a credit card, auto or mortgage
Why are loan payments from savings not subject to the same limits?
Regulation D limits the number of transactions made from non-transaction accounts to transaction accounts (Checking accounts) because of the reserve requirements. A loan is not a transaction account and, therefore, is not affected by Regulation D.
What if you've had 6 transactions for the month and need an overdraft to pay a check?
If your account has had the maximum number of transactions in a given month-even if you have enough money in your designated overdraft account to cover the check-SCCU is required to return the item unpaid. As an alternative, you might consider using your SCCU credit card as a secondary source of overdraft protection for your checking account. You can then transfer funds whenever needed. As with all SCCU cards, our interest rates are competitive and there is no cash advance fee.
Will you be charged a fee if a check is returned because you've reached the limit for transactions?
This would depend on several different factors. Reaching your limit for overdraft transfers halts that feature. If there are insufficient funds in your checking account and the check is returned, you will be charged an NSF fee.
*For purposes of Regulation D, the term "month" is not limited to calendar month, and includes any four-week period or statement cycle of four weeks. Source: Complianceheadquarters.com.
Here are a few suggestions that can help you stay within the Regulation:
- You can make an unlimited number of deposits, withdrawals or other transactions without fee at the ATM, teller or by mail.
- If you have your savings or money market account set up as a source of overdraft protection for Checking, consider keeping more money in your SCCU checking accounts, which will necessitate fewer overdrafts.
- Consider using your SCCU checking account for electronic transactions or recurring payments, instead of your Savings or Money Market accounts.
The information on this page is for educational purposes only. SCCU is not engaged in providing estate planning or other advice. Please consult with a competent estate planning professional regarding any specific estate planning questions.