New Rule Change Makes Savings Accounts More Attractive

men holding money
Photo by Dean Drobot / Shutterstock.com

A new Federal Reserve ruling will make it easier for many people to pull money out of their savings accounts each month.

The nation’s central bank temporarily has suspended a rule that normally limits certain types of withdrawals of money from savings accounts to six transactions per month.

For now, you may be able to take unlimited withdrawals without penalty. This applies to both savings accounts and money market accounts.

Typically, you are at risk of having to pay a fee to your bank if you make more than a half-dozen withdrawals from your savings account each month.

But the Fed’s rule change gives banks the option to suspend the six-withdrawal limit. As the Fed explains it:

“The interim final rule permits depository institutions to suspend enforcement of the six-transfer limit, but it does not require depository institutions to do so.”

So, if you need to make more than six withdrawals from a savings or money market account in a given month, check your bank’s own policy first.

The Federal Reserve says it is enabling banks to allow unlimited withdrawals “at a time when financial events associated with the coronavirus pandemic have made such access more urgent.”

USA Today notes that the Fed can make the switch because in March, it eliminated reserve requirements for banks in the hope that doing so would help banks lend money during the crisis. According to the publication:

“Previously, banks had to hold some money in reserve against funds withdrawn from checking accounts. Since savings accounts had no such reserve mandate, customers were limited to six withdrawals or transfers each month.”

Where to put your emergency savings?

The coronavirus pandemic has caused a wave of unemployment rivaling that of the Great Depression. Unfortunately, millions of Americans were not prepared financially to deal with such a crisis.

A 2019 Federal Reserve study found that 30% of U.S. adults were “either unable to pay their bills or are one modest financial setback away from hardship.”

No one can say how long the pandemic will last. For that reason, it is wise to start — or to add to — an emergency fund. We offer pointers for doing so in “9 Tips for Starting an Emergency Fund Today.”

If you decide to put money in a savings account, look for a bank that offers a great return on your money. Stop by our Solutions Center and compare rates on savings accounts.

A savings account isn’t your only option when creating an emergency fund, however. For more options, check out “The 3 Best Places to Keep Your Emergency Fund.”

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
5 States Where Drivers Pay the Most for Car Insurance
5 States Where Drivers Pay the Most for Car Insurance

Auto insurance will cost you more than three times as much in one state compared with another. Here’s how to lower your rates no matter where you live.

9 Free Things That Used to Cost Us Money
9 Free Things That Used to Cost Us Money

Not everything is getting more expensive.

3 Tax Penalties That Can Ding Your Retirement Accounts
3 Tax Penalties That Can Ding Your Retirement Accounts

Protecting a nest egg is tough enough. Don’t make the situation far worse.

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

36 Things That Will Be Obsolete Soon
36 Things That Will Be Obsolete Soon

The writing is on the wall for dozens of things we have grown up with.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Federal Income Tax Breaks for Homeowners
8 Federal Income Tax Breaks for Homeowners

Some of these deductions and credits are available to a wide swath of homeowners.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

10 Types of Retirement Income That Are Not Taxable
10 Types of Retirement Income That Are Not Taxable

There are lots of things Uncle Sam can’t touch — so long as you play by the rules.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

17 Surprising Things You Can Sell for Extra Money
17 Surprising Things You Can Sell for Extra Money

You probably don’t realize these items are worth decent cash.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.