Internet Banking Limits

Question: Our question has to do with money market accounts and the limited transactions per month. We were addressing Internet banking. If the customer sits at their computer to transfer funds from their money market account to their checking account, shouldn't that be unlimited? The funds are not being issued to a third party. Why aren't they unlimited?

Answer: Our answer came from John Fields, Regulatory Officer, Philadelphia Federal Reserve - it's in the commentary of Reg D - 2-342.22, which reads, in part: Question 4: Verify that the following list correctly categorizes the transactions that fall within each category:

Three transaction limit - Point of sale transactions with either ATM or credit card company debit cards and withdrawals payable to third parties initiated by checks or drafts.

Six transaction limit: - Preauthorized transfers through ACG or EFT; automatic transfers for overdraft protection; telephone, fax, and computer transactions (emphasis is the editor's) to transfer funds to another account at the same institution; transfers between a parent's account and his or her child's account and withdrawals initiated by telephone where the proceeds are paid to third parties.

Unlimited. Transfers to pay loans at the same institution; withdrawals made (1) in person, (2) at an ATM (3) by messenger, or (4) by mail (via a check sent to the depositor; telephone withdrawals where the withdrawn funds are mailed to the account holder; and transfers between accounts of the depositor at the same institution initiated (1) in person, (2) by mail, (3) by ATM or (4) by messenger.

Bottom line? Yes, Internet transfers count as one of the six.

Editor's Note - our subscriber came back after he had received the answer above, and added this: "That's exactly my point. Reg D has not been updated since the advent of internet banking. If a customer can go to any ATM (doesn't even have to be his own bank's ATM and it doesn't have to even be in his own state) and transfer funds unlimited, then he should be able to sit at his computer and transfer funds from his money market account to his checking account all day long with no limits. I know there are efforts to increase the number of allowable debits to money market accounts to 20, but I'm sure I'll be retired before that happens."

Copyright © 2005 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 15, No. 11, 11/05