A MyBankTracker reader wanted to know why Chase turned her savings account into a checking account. If this happened to you, you may be wondering how and why it happened.

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When you first open an account with your bank, your natural instinct would probably be to open a savings account with your bank as well. Since banks want to have as much of your business as possible, linking your checking and savings comes in handy, because you can easily move money from one account to the other. This is especially useful if you know you’ll be low on funds before payday.

Making more than 6 withdrawals; Regulation D

While it’s great to have a reserve, a common misstep is placing all your money in your savings with the intention of not touching it, but finding yourself dipping in to it periodically. If you authorize more than six transactions or withdrawals per statement cycle from you savings account, you will be slapped with some kind of fee or other penalty due to a law called Regulation D.

MyBankTracker found that this has caught many customers off-guard. Chase Bank, however, is one bank that does not charge a fee as a penalty. Instead, they automatically switch their customers’ savings accounts to checking accounts. However, once you exceed the six withdrawals, Chase will charge you a $5 fee.

Chase states they will notify their customers when they reach their savings withdrawal limit, but you may get notice after the switch. It’s all perfectly legal.

To find out what other banks are charging, see our table for excessive withdrawal limits.

Savings Withdrawal Limit

It may seem unfair to be penalized for accessing your own money, but a federal law, Regulation D, was created to maintain the difference between a transaction account and a savings account.

Regulation D is a section in the Reserve Requirements for consumer banking institutions outlined by The Federal Reserve. Regulation D places a restriction on the number of “convenient” withdrawals you can make from your savings account to no more than six. Essentially, if you are chronically moving money from your savings to your checking and not withdrawing it directly, then you are at risk for a penalty.

The minimum penalty is changing your savings into a transaction account, so you are lucky if you bank with Chase. The regulation allows banks the option to charge fees. Some banks charge $3 to $15 in fees once you exceed the limit. (The fees vary from institution to institution and it is unclear what the fees cover.)

A Bank of America representative previously told MyBankTracker that they impose a fee to encourage better spending habits.

Don’t let the banks take your money! As long as you remember you have six times to go the convenient route, you’ll be in the clear.

How to keep your savings as savings

Move to an online savings account

Ideally, you opened a savings account with the interest in not only setting aside money, but growing it as well. Chase’s interest rate and APY is a mere .01 percent — which means your savings cash won’t grow much. You need at least $300 a day or a reoccurring deposit of $25 to not be charged a $4 service fee.

On the other hand, you can take your $25 and open an account with Ally Bank, an online bank, and not pay a maintenance fee. You also won’t be penalized for withdrawing your money. Best point of all, Ally Bank also offers a .99 percent APY (currently).

Obviously, you’ll be getting a better investment with Ally than with Chase. To find out what other online banks are offering, check out MyBankTracker’s savings page.

Use your Chase savings as an emergency fund

Since your Chase savings won’t earn you any interest, a good idea is to think of that account as quick access to some emergency cash. While online banks give you more interest and don’t charge as many fees, if you need money in a hurry, you will discover that it takes days to transfer cash from your online savings to, say, your Chase checking account.

If you know you will need to withdraw money from your Chase savings, but are close to reaching the six withdrawals, just visit a Chase ATM. Withdrawing the money directly from your savings account allows you to circumvent Regulation D. In other words, it won’t count towards the six withdrawals if you visit an ATM or teller.

If your savings account becomes a checking account, you can easily change it back by calling a Chase customer representative.

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Ask a Question

  • mstclair

    I think that if you take a look at the regulation, you will see that it “requires” the banks to take action – fees or account change or closure rather than “allows” as you suggest.

  • bman

    This regulation has been in place for many years, just never enforced. And I believe it is pre-authorized electronic withdrawals, which include ATM, online transfers and overdraft protection transfers if you have your savings set up to do that. You can visit a teller and do it as much as you want though.

  • Is there a way to switch it back to savings after they make the change?

    • Yes, you can. The bank may want to see that your activity with the checking account has improved enough to give you a savings account again.