Effective July 2, 2009, the Federal Reserve revised Regulation D – making the savings
and money market deposit account withdrawal and/or transfer limitation easier to
understand.
Federal regulations require banks to limit the way withdrawals are made from a savings
or money market deposit account. Withdrawals in excess of these limits may result
in a fee or account closure.
Customers often wonder why bank accounts have different terms or pay different interest
rates. One of the reasons is Regulation D:
- Regulation D applies to all financial institutions.
- It imposes uniform reserve requirements on transaction accounts or non-personal
time deposits, defines such deposits, and requires reports to the Federal Reserve.
- The regulation establishes operating parameters for each account category, such
as transaction accounts (demand deposit or checking accounts) and non-transaction
savings accounts. For instance, this regulation currently prohibits the payment
of interest on business checking accounts.
- Regulation D also places limits on the type and number of withdrawals that can be
made from certain non-transaction accounts, such as savings and money market deposit
accounts.
- Checking accounts are deemed to be "transaction accounts", and have no such transfer
or withdrawal limitations.
Below are some common questions about Regulation D. We hope this Q&A will help
you better understand what accounts are affected and provide you with tips for making
sure you are aware of all your transaction limitations.
What accounts does Regulation D affect and how?
All Savings Accounts and Money Market Deposit Accounts are subject to Regulation
D. During any month, you may not make more than six withdrawals or transfers to
another bank account of yours or to a third party by means of a pre-authorized,
automatic transfer or telephone order or instruction, or whether initiated by check,
draft, debit card (if applicable) or similar order to a third party. This includes
online banking account transfers and bill payments.
What type of transaction limitations apply to Regulation D?
Regulation D provides unlimited transactions on deposits and ATM cash withdrawals
and transfers (subject to the daily amount limits and sufficient available funds).
Withdrawals or transfers by mail, in person at one of our offices, and through an
ATM are unlimited and are not subject to the Regulation D six transfer/withdrawal
limitation. Transfers/withdrawals in excess of the six transfer/withdrawal limitations
as described above may be subject to a service charge. However limited transactions
include automatic transfers to another deposit account at Mercantile Bank, pre-authorized
transfers to a third party or another institution, telephone transfers, and those
initiated by phone call, fax or e-mail through a Bank representative, and online
banking transfers and Bill Payments.
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Are transactions subject to a service charge if I exceed the monthly
limitations on my money market account?
Yes, however withdrawals or transfers by mail, in person at one of our branch locations,
and through an ATM are unlimited and are not subject to the Regulation D six transfer/withdrawal
limitation.
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Are transactions subject to a service charge if I exceed the monthly
limitations on my savings account?
Yes, different transfer/withdrawal limitations apply for savings accounts. Details
for each savings product may be found at the following links:
Personal Savings
Minor Savings
Business Savings
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What happens if my account has excessive transactions during a
month?
Customers who violate these limits will be contacted by Mercantile Bank. Should
this type of violation continue, the account will be closed or the funds transferred
to a transaction account that the depositor is eligible to maintain.
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