An excessive transaction fee is a penalty charged by banks or credit unions when a customer makes more withdrawals or transfers from their savings or money market account than the allowed monthly limit. Typically, this limit is six transactions per month, as was historically mandated by federal Regulation D, although this regulation has been relaxed since the COVID-19 pandemic. Despite the regulatory change, some financial institutions continue to impose these fees to discourage excessive withdrawals and protect their cash reserves
. Excessive transaction fees usually apply to certain types of transfers such as debit card purchases, online bill payments, account-to-account transfers, wire transfers, and phone transfer requests from savings accounts. ATM withdrawals and in-person withdrawals generally do not count toward this limit and are not subject to the fee
. The fee amount varies by institution but typically ranges from $3 to $25 per transaction beyond the allowed limit. Some banks may refund these fees temporarily due to regulatory changes, but this is not universal
. To avoid excessive transaction fees, customers can:
- Use a checking account for frequent transactions, as it usually allows unlimited transfers without fees.
- Limit the number of electronic transfers from savings accounts.
- Use ATM or in-person withdrawals instead of electronic transfers.
- Monitor account activity and set alerts to avoid exceeding limits
In summary, an excessive transaction fee is a charge for exceeding a bank- imposed limit on certain types of withdrawals or transfers from a savings account, designed to encourage customers to use savings accounts primarily for saving rather than frequent spending.
