Bank of America

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Q: I recently was charged $3 by Bank of America for “Cost For Checks And/Or Withdrawals Over Restriction.” I stash money in my cost savings accounts with the intention of savings, then many times lack cash before my month-to-month paycheck, and need to drawn from cost savings to cover costs in checking. Why should banks be permitted to punish a customer for relocating cash between accounts? Why can’t the Federal Reserve let’s move our cash around the means we choose, and force banks to adhere to their six-a-month restriction?

– Sharon

A: (To provide a little background on Sharon’s concern: Bank of America consumers with a cost savings account go through a $3 cost for each withdrawal after the third per month.)

For customer financial, Policy D places a month-to-month withdrawal restriction of 6 per month on savings accounts.

The policy governs the amount of the banks must’ve on reserve in a particular kind of account, while the rest can be provided out. For a savings account, the reserve requirement is 0 % of the balance. For a bank account, which is likely to have even more transaction task, the reserve requirement is 10 % of the balance.

Most banks will charge an “excess withdrawal fee” per withdrawal over the limit, while the first six withdrawals of the month are cost-free. While this rates model is the industry standard, some banks take various techniques.

Bank of America starts to charge a charge after the 3rd withdrawal as a caution to cost savings clients. SunTrust takes a similar strategy by tacking on a $4 fee after the 2nd withdrawal per month on particular cost savings accounts.

From a consumer standpoint, such charge policy does seem ridiculous when you’re just moving your cash around. But, there’s no rule that states that banks can not charge a withdrawal charge. Banks could charge for every single withdrawal if they wanted to do so. In truth, some prepaid cards will charge for each bank transfer and ATM withdrawal.

Excess withdrawal costs assist prevent savings consumers from shifting funds often so that banks can optimize the 0 % reserve requirement on its financing operations. It’s likewise part of the reason that cost savings accounts pay interest on deposits.

Note that the restriction applies to outbound electronic, online and phone-initiated transfers. If you want to stay clear of the excess withdrawal charge, you can withdraw cash at the ATM or personally and deposit that cash at another bank.

Or, since you are discovering that you frequently have to tap your cost savings, it would be a better concept to keep a larger balance in your checking account to serve as a buffer. You’d probably conserve even more cash in excess withdrawal costs than you ‘d earn in interest anyhow.