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Baffled by Terminology
I am having a hard time understanding the "6 transactions a month" rule at my bank. It took over our local bank many years ago and I keep getting letter that I am "over" my limit of transactions. I have gotten millions of different answers on what a "transaction" is. I was told that I can physically come into the bank and do as many as I want, but I can not do those same transactions on line or at the ATM. I find it hard to believe that if I am physically in the bank 100 times a month transferring money into my checking account and taking out money, that it is any different than doing it on the ATM or on my computer at home.
Regulation D limits my number of pre authorized transfers and withdrawals including those from the bank's Internet banking service. No more than three of these may be payments to third parties by check, draft or debit card.
Can you explain to me why this is? I do not understand why the government has a say on how I may retrieve my money. Both my husband and I use my ATM to get money so it is impossible to see how many times it is done by each of us.
I guess I am baffled on why going into the bank is different than doing it on the ATM or online. Incidentally, it took the bank employees two years themselves to figure out what I was doing wrong and what counted as my six transactions. I have only gone over once in a while, not every month.
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 Let's start by discussing why those Regulation D limits exist. They are there to separate checking accounts from savings and investment accounts. The separation is there to help the Federal Reserve System better manage the money supply in the country.
Checking account balances are counted along with cash as "spending money" by economists that watch the money supply. Savings and investment accounts, including money market deposit accounts, are one step removed from "spending money" status. To manage the money supply, the economists have to be able to measure it, so they need to have controls over the ease with which savings funds can be spent, thus the transfer limits.
The regulation, by the way, does not limit withdrawals or transfers initiated at ATMs. If your bank counts ATM transactions as part of your monthly limit, it's because the bank, not the regulation, imposes that requirement.
If a transfer is so convenient that you can do it from the comfort of your home or office, it's going to be subject to the monthly limits. If it's relatively less convenient because you have to travel to the bank or an ATM to make the transaction, it's not counted against you. While your bank can certainly include ATM transactions in its monthly limit for your account, it's our experience that most banks don't do so.
Published on BankingQuestions.com 7/31/08
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