Is There a Regulation Prohibiting...?

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Question:

Is there a regulation that prohibits a bank from offering a business customer the ability to use a savings account to protect a business checking account from overdrafts or from just making transfers via the internet or phone? I am aware of the transaction limitations under Reg D, but a co-worker believes there is a regulation that prohibits transfers from an interest bearing account to a non-interest bearing account for businesses.

Answer:

I'm not certain of where your co-worker may have obtained that information, but there's no such prohibition of which I am aware. That said, business interest bearing accounts from which such transfers can be made fit the definition of "savings account" in Regulation D. That means that auto-transfers, internet transfers and telephone transfers are all subject to the monthly transfer limits in that definition.

First published on BankersOnline.com 10/01/07