Can we offer debit cards to savings accounts customers?

You are correct that Regulation D should affect your decision whether to issue debit cards on savings accounts and/or money market deposit accounts (both called savings accounts here).

One of the truisms of this business is that you can't succeed by giving your customers added convenience (the debit card) and then telling them their use of the convenience is (severely) restricted.

So, it would appear that your options are to (1) issue cards in what would be a crippled product, in my view; (2) reclassify any savings account with debit card access as a transaction account for Regulation D purposes, making sure you don't allow savings account debit card use for business accounts (since they cannot have an interest-bearing transaction account); or (3) abandon this idea of savings/debit card accounts.

One other variable enters the mix. What about processing? If your debit card network cannot send a POS debit to a savings account (some cannot), can your processor "run interference" for you and translate a checking account transaction into a savings transaction?

[Editors Note:As of 7/2/09, the separate limit of three per month for checks, POS debit card transactions, etc., has been eliminated, and those transactions are now only subject to the 6/month limit that applies to other restricted transfers and withdrawals.]

First published on BankersOnline.com 04/07/03