Here's What Happens When You Exceed the Monthly Withdrawal Limit on Your Savings Account

Depending on the bank you use, your savings account may have a monthly withdrawal limit. In the past, all savings accounts had a limit of six "convenient" monthly withdrawals due to Regulation D, a banking regulation put in place by the Federal Reserve. "Convenient" refers to the type of withdrawal, with examples including online and phone transfers.

The Fed got rid of this monthly withdrawal limit in 2020. That means there's no longer any government regulation on how many monthly withdrawals you can make from your savings account. However, some banks still have their own limits in place.

Most banks that have savings account withdrawal limits set the limit at six per month. But some set it even lower. You can find out whether your bank has a withdrawal limit and the penalties for breaking it in your account's terms. To give you an idea of what to expect, here are the potential consequences if you exceed your savings account's monthly withdrawal limit.

The bank could charge you a fee

The most common penalty in this situation is an excess withdrawal fee. This generally ranges from $3 to $15, depending on the bank, and it's charged per excess withdrawal. For example, let's say your bank charges a $10 fee for withdrawals in excess of six per month. If you make nine withdrawals that month, that's three fees for a total of $30. Certain banks have a maximum number of excess withdrawal fees they charge monthly.

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The withdrawal could be declined

It's also possible that instead of charging you a fee, your bank will simply decline the transaction. This could be inconvenient, especially if you really need the money. In that case, the best option is to contact customer service, explain the situation, and see if there's a way that they can help you put through the withdrawal.

It may convert your account to a checking account

Some banks reserve the right to convert your savings account to a checking account due to excess withdrawals. With these banks, the terms usually state that the account could be converted if you repeatedly go over your account's withdrawal limits. It's not something that's going to happen right away, so you don't need to worry if you make a mistake one time.

It may close your savings account

The most extreme penalty is the bank closing your savings account entirely. This is rare, but there are banks that reserve the right to do this for excess withdrawals. Once again, banks normally only take this measure if you repeatedly exceed the withdrawal limits for your savings account.

Make sure you know the rules for your savings account

Withdrawal limits on savings accounts can be frustrating, especially since they're not legally required anymore. But these relics from another time have still stuck around with some banks, so it's important to watch out for them. Here's what to do:

• First, check if your savings account has a monthly withdrawal limit.
• If it does, make a mental note (or an actual note) of that limit, and also review what your bank considers a "convenient" withdrawal that counts toward it.
• Keep track of your withdrawals each month to avoid going over the maximum you're allowed.

If you find yourself coming up against that limit often, it's probably time to reconsider either the savings account you have or how you're using it. There are savings accounts, including excellent high-yield savings accounts, with no withdrawal limits. You could switch to one of those.

Keep in mind though that savings accounts aren't exactly intended for moving money around frequently; checking accounts are the better option for that. Consider keeping more money in your checking account, ideally enough to cover about one month's worth of expenses. Make sure your paychecks get deposited to your checking account, as well. If you do that, you shouldn't need to tap into your savings account more than once or twice per month.