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  • Protecting Your Accounts From Federal Regulation D Penalties

    Federal Regulation D establishes the requirement for all banks and credit unions to maintain a particular monetary reserve amount at the Federal Reserve Bank. Regulation D sets limits on non-transaction accounts (Savings accounts, Insured Investment accounts, Money Market Plus accounts, and Certificate accounts) to ensure funds intended to be deposited for savings stay within the financial institution. If members use their non-transactional accounts as transactional accounts (Checking and Interest Checking), financial institutions are at risk for federally mandated penalties.

    In general, a transactional account is one designed for frequent, unlimited transfers of money without withdrawal penalties.  If you access non-transactional accounts more than six times per month through a non-personal withdrawal, you may be charged a penalty fee in accordance with Regulation D.  Non-personal withdrawals include the following transactions: ACH transfer, automatic transfers to other accounts, Online Banking transfers, Call-24 transfers, transfers over the phone with a Tech CU representative, overdraft transfers, checks, or point of service (POS)/CheckCard transactions.

    Remember: Your Tech CU CheckCard is not a credit card. Whenever you use it to make a purchase that exceed the funds in your Checking account, that purchase hits your overdraft protection. If your overdraft protection is a non-transactional account (typically a Savings account), it will apply toward the Regulation D limit.

    If you’ve exceeded your monthly Regulation D non-transactional allotment (more than six per month), any purchases that would normally be handled by your non-transactional overdraft account could be subject to non-sufficient funds penalties.  

    Regulation D does not, however, apply to what it identifies as personal withdrawals.  These include transfers or withdrawals done in person at a Tech CU Financial Center, cash withdrawals or transfers completed at an ATM, or withdrawals or transfers requested by mail.

     How to avoid Regulation D penalties 

    • Option #1: Maintain a higher balance in your Tech CU Checking account. Tech CU’s Basic Checking and Interest Checking both offer unlimited transactions that don’t apply toward Regulation D limits. Keep in mind that there is no limit on transferring funds into your Checking account when you perform the transaction in a branch or at an ATM.
    • Option #2: Change your overdraft protection to an account that does not qualify for Regulation D limits. Instead of tapping into a Share Savings, Insured Investment, or Money Market Plus account, maintain your overdraft protection through a line of credit. Transfers from a line of credit into your Tech CU Checking account are not subject to Regulation D.
    • Option #3: Set up eNotifications through Online Banking. You can elect to receive an eNotification email each time a transaction comes through your Tech CU account, or when your account hits a specific Regulation D threshold.

    For more information about Regulation D, please feel free to contact a Tech CU representative at one of our Financial Centers or call our Contact Center at (408) 451-9111 or (800) 553-0880.