How Long Do Ach Transfers Take To Clear

On April 24th, 2020, the Federal Reserve Board announced an interim final rule that removes this six per month limit on convenient transfers. This was in response to the Coronavirus epidemic and the Federal Reserve appears to have made this change permanent. It will be up to banks as to how quickly they will remove the penalties and the limits (which existed only because of the Federal Reserve rule).

Did you know that you're limited to just six (6) transfers out of a savings account each billing cycle?

If you go over, you could get in trouble. Most banks will even fine you.

Bank of America calls it a Withdrawal Limit Fee and will ding you $10 for each withdrawal or transfer above six (limited to $60). Unless you have a minimum daily balance of an amount that varies with each savings account type. Their Regular Savings requires a minimum daily balance of $20,000 to avoid this fee. (fee schedule, it's on page 4)

Ally Bank will charge you $10 per transaction over the limit. There's no way to avoid it, just in case you had $20,000+ lying around and a desire to make more than six transfers a month you crazy cat you.

Six seems like a lot but if you have unlimited overdraft protection, which is an automatic transfer, it could happen pretty easily (that's how I discovered this limit and fee!).

Table of Contents

Why does this six transfer limit exist?
What counts as a transfer?
How to get around this limit
Why the fee?

Why does this six transfer limit exist?

It exists because your account is considered a "savings deposit" and they're subject to different rules.

Why those rules exist has to do with the reserve requirements, or how much the bank needs to keep around in their vaults, on different accounts. The rules regarding those requirements gets complicated and are updated each year depending on what the Fed is hoping to accomplish, so I won't go into it (and it's not relevant).

Section 204.2(d)(2) of Regulation D of the Federal Reserve Board's definition of a "savings deposit" defines the limit:

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.

You can see it quoted here in a letter from the Federal Reserve in 1996. It's also repeated again in this document, which is far easier to read than the regulation.

A few additional points:

The limit is only on "convenient" transfers and withdrawals, like preauthorized or automatic transfers.
It's only a limit on your savings account. You can have an unlimited number of transfers from a checking account.
Not in the above quote but "institutions must reserve the right at any time to require at least seven days' written notice of an intended withdrawal (in practice, this right is rarely, if ever, exercised)." Technically, you can request a withdrawal and they can sit on it for 7 days!

What counts as a transfer?

Anything "convenient" counts towards this limit of six.

A "convenient transfer or withdrawal" is:

Preauthorized, automatic transfers (including overdraft protection and bill payments)
Initiated by phone, fax or computer
Made by check, debit card, or other similar order made by you to a third party.

It feels a little arbitrary what convenient means but that's the rule.

How to get around this limit

Make bigger, but fewer, transfers? Then you don't hit six and six is a lot.

Or, you can make "unlimited withdrawals by mail, messenger, ATM, in person, or by telephone (via check mailed to the depositor)." These aren't considered convenient and don't count against the limit.

If you need to make a transfer, you could withdraw it from the ATM from savings and then deposit it into checking. Or you could walk up to a teller and make the transfer.

Why the fee?

Because a bank can? And because it makes it so you pay attention?

If they keep letting you go over the 6 transfer limit, they have to reclassify it as a transaction account… which is a pain. They would much rather you not go over but until you learn, they'll happily collect ten bucks a pop.

Now you know why there is a six transfer limit – go impress your friends. 🙂

Other Posts You May Enjoy:

LegalShield Review: Access a Lawyer for a Low Monthly Fee

For a low monthly membership fee LegalShield will give you access to a lawyer for all kinds of free services including writing letters, reviewing documents, and even estate planning. It also has business plans that offer services such as sending collection notices, help with the IRS, and help with copyright or trademarks.

RebatesMe Review: Get Your $30 Sign Up Bonus

RebatesMe is an online shopping portal where you can earn cash back at some of your favorite stores. There is also a sign up bonus when you earn your first $10 in rewards. You can redeem your rewards for cash or gift cards.

Is It Cheaper to Buy or Build a House?

According to the National Association of Realtors, the median sale price of existing homes is $295,300. That price point is nearly $34,000 less than the cost of a new house. Because these numbers reflect all homes across the U.S., though, they only tell a partial story about whether it is cheaper to buy or build a house.

8 Best American Express Platinum Card Alternatives

Are you searching for the Platinum Card by American Express alternatives in order to avoid the hefty $695 annual fee the card requires? The American Express Platinum card has several attractive alternatives. However, despite the $695 annual fee, it is one of the best cards out there for heavy travelers.

Jim Wang is a thirty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

Reader Interactions