Similarly, what if I try to put as much as possible into the savings account, but also use it as overdraft protection? If I have more than 6 overdraft prevention transfers, it would indicate some poor planning on my part, but I didn’t know I was breaking any laws. Of course, I bank at a credit union which is, perhaps, not covered by that regulation.
You’re good at the teller line, but not at the ATM or in any pre-authorized debit transactions.
Here’s your daily cite:
Relevant Regulatory Statement from THE FEDS:
“the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle . . . to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order, or instruction, and no more than three of the six such transfers may be made by check, draft, debit card, or similar order made by the depositor and payable to third parties.”
I chose to cite this letter from THE FEDS since it’s more informative than the pure regulation. The part of the below URL
Cite:
www.federalreserve.gov/boarddocs/legalint/FederalReserveAct/1997/19970121/
PS - To the OP, your absolute best place to get these answers is from the nice people on the “Bankers Online” Forums.
www.bankersonline.com -> Click on Bankers Threads
It’s chock full of compliance officers, and those guys will have a good answer for this kind of question quicker than you can turn around.
Credit unions are covered by 99% of the same regulations as banks.
The difference, from the perspective of many bankers, is that credit unions pay a lot less in taxes and receive a LOT less attention from regulators than commercial banks.
Those checks are usually written at the time that they are submitted. You really shouldn’t expect a check to a merchant to have the date noticed in the first place.
Incidentally, I wrote a check to a Check 21 merchant, and then wanted my money back, because it turned out that they didn’t have the product I’d asked for. Annoying as it was to be give something “close enough,” it was even more annoying to have the money withdrawn from my account. They wound up just giving me cash, which I immediately deposited across the parking lot from the store, and which showed up in my account three days later. I despise Check 21.
I think you’re good at either the teller or an ATM, but not in pre-authorized, telephonic, or computer transactions; see here. The distinction the FRB is trying to make is in the level of convenience, which sounds perverse but actually has some relevance. Banks are required to hold some proportion of their customers’ deposits in reserve, but the proportion depends on the type of account. The amounts in checking-type accounts are expected to fluctuate more rapidly and unpredictably than amounts in savings-type accounts, so the banks need to hold larger amounts in reserve. (This in turn affects the amount the banks are able to invest, and hence the interest rate the banks can offer.)
Actually, ATM withdrawals are one “loop hole” in Reg D. Notice closely the Regulatory Statement you quoted:
The withdrawal limit applies to only 2 types of withdrawal: 1) transfers to another account of the depositor at the same institution, and 2) 3rd party payments. A withdrawal from an ATM fits neither of those descriptions. The bank where I worked did not count ATM withdrawals against Reg D limits. Other banks may have a different policy. BTW, Money Market accounts are classified as savings and do fall under Reg D.
Another loop hole is that the reg does not specify how many times a customer can exceed the withdrawal limits before the bank must close or convert the account. The reg only states that the limit cannot be exceeded an inordinate number of times within a reasonable time period. Our bank settled on 3 times in any 6 month period, but other banks may differ.
Try explaining this vague and loophole filled reg to a customer who has had his high yield Money Market converted to simple savings, or his savings account converted to checking. It’s not a receipe for a headache, it’s a guarantee.
could be wrong, but I don’t think Art. 4 of the UCC has been adopted by every state, FWIW
Actually, confirming that the date on the check is today’s date is beaten into pretty much all retail cashiers and anyone else that uses a “guarantee” service such as Telecheck. If a dishonored check is dated with anything other than the date the check was guaranteed, the guarantee is void and the merchant has bad checks for lunch.
Next time you want a cash deposit to post quickly, do it in person at a bank.
Transfers (overdraft protection related or otherwise) between your own accounts within the same bank are not considered withdrawals under Reg D. You can have as many internal transfers as you’d like without violating this regulation. This is why we recommend to our customers that, if they’d like to earn the higher interest rate offered by a savings but still have access to the money for their daily transactions, they set up an overdraft protection relationship like the one you describe. Of course, some banks also charge a fee each time this transfer is made automatically. I don’t know of any that charge you to move the money between your accounts yourself.
Uh, that’s not necessarily true…see the cite given above. My bank has definitely warned me (and charged a fee) for transferring money from my savnigs to my checking too many times in one statement period, citing regulation D as the reason for this.
Yes they are, at least in the eyes of most banks. Again, look at the relevant part(s) of the Regulatory Statement (edited for clarity):
Moving money from a savings account to any other account held by the same depositor at the same institution under an overdraft protection service is a preauthorized, automated transfer. The potential loop hole here is that while the reg specifically covers preauthorized/automatic transfers under the 3rd party payment section ("…or to a third party by means of a preauthorized or automatic transfer…"), it does not specifically mention “preauthorized” or “automated” when covering same depositor transfers. Perhaps your bank’s legal eagles have interpreted that to mean overdraft protection is not covered under the reg, but that seems like pretty shaky ground to me. On the bright side, in my years as Reg D enforcer, the regulators never looked at how we applied the reg, only for evidence that we did apply the reg consistently.
A little Reg D background may help. The very simplified story is this: Banks are required to keep a certain percentage of deposited funds in an account with the Federal Reserve Bank at all times. This is to help ensure that banks remain solvent even if withdrawals exceed deposits over a short period of time. Any cash on hand above the reserve requirements can be invested. Savings accounts, since the the funds are presumably on deposit for the long term and not as likely to be withdrawn, are subject to a smaller reserve requirement than demand deposit (checking) accounts. When banks wanted to begin offering interest checking and money market accounts the Feds were concerned about reserve requirements for these type accounts. They are, on one hand, savings accounts that pay interest and in theory should have more stable deposits. Banks, therefor, wanted to pay eserves based on the lower requirement. On the other hand, saith the Fed, they are transaction accounts as well and are, by definition, subject to more balance volatility than conventional accounts. The Fed “solved” the problem with Reg. D, in effect telling banks that you can offer these accounts and set the reserve requirement as “savings”, but we’re going to limit the withdrawal freedom to protect the integrity of the reserves. If uor customers exceed our withdrawal limits, you have to convert the account to demand deposit and pay the higher reserve.
You should know that if anyone agrees to accept a post dated check then they have agreed NOT to submit it. If they do submit it, it’s fraud.
You are attacking the victims here, and owe them an apology.
Not necessarily so. If you give an individual a check, and that person agrees to hold the check, then maybe you’ve got a point. But the OP’s probably thinking of a situation like this: “Hmmm… I’ve got to pay my gas bill, but I won’t have any money in my account until the 15th. I know what I’ll do! I’ll send the check today – the 3rd – but post date it. That way it won’t be deposited until the 15th and they won’t cut off my gas! What a genius I am!”
Yeah, there are a lot people that are that damn stupid.
What Doctor Jackson said. If your bank is charging you a fee for transfers, it’s bank policy, not Reg D. True Reg D violations result in account closings, not fees. The bank has no say in this; why would we voluntarily be closing out the accounts of otherwise-profitable customers simply for making withdrawals? If the reps are citing Reg D as the reason for the fees, they’re either lying or have been misinformed.
…and I see Balthisar has already covered the number one reason why people write post-dated checks. They’re trying to receive credit for payment on the date the check was written, while not actually having to pay them until later.
You are wrong. See the cites thoughtfully provided by others above. To you, I offer the same advice I offer to the customers: don’t write checks on money that’s not in your account, and don’t write a check to someone until you intend to pay them. That is what consititutes fraud.
Balthisar, let’s say i’m going to be out of town on the 1st, when my rent is due, till the 7th. I need to make sure my rent is not late. I’m leaving on the 28th. I’m trying to make sure that the landlord (or creditor) is paid ON TIME. Where’s the fraud there? If the check is dated for later, then enforce the late fee! The maker said that there would be funds for when the check was written for, as it is now a short term promissory note.
Granted that this thread is a 7-year-old zombie. But still, I’d love to ask a question to the OP, who wrote, in the very first post:
If that’s so, then when the payee deposits the check prior to the date written on it, doesn’t that constitute a violation of that verbal agreement?
I’m not making any claims about whether or not post-dating a check is illegal. And I’m not saying anything about whether or not the bank should pay the check. I’m only talking about the payee who accepted the check and then deposited it.
If someone knowingly accepted such a check – such as the landlord in the case suggested by russi275 earlier today – and then he went and deposited it early, that person would be guilty of breaking that verbal agreement. If this was done by an employee of some kind, he should be censured by his bosses – either for accepting the post-dated check against company policy, or for depositing a check that was acceptable to company rules. One or the other, but they can’t claim they did nothing wrong.
I can go online if I want, and tell my bank I want to pay a certain bill on a certain date.
A check is written instructions to a bank telling them to pay a certain amount on a certain date.
Your bank has a policy of ignoring its customer’s instructions, because its easier for them.
Seems like kind of a shitty policy to me. What bank do you work for?
It doesn’t matter. At least here in the US, all the banks ignore the date written there.
I can vouch for this based on my last 5 banks’ written policies.
I’ll note that there is usually weasel language in the customer agreements, though… the bank is within the letter of their agreement whether or not they honor post-dated checks.