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Home >> Accounts >> Checking Accounts
Law, or Bank's New Rule?
Citibank told me that a new law has been put into effect that affects consumers with interest bearing checking accounts. They told me that as of April 1, I will have to give my bank seven days notice if I wish to withdraw money from my checking account. Is this true or just a new rule by Citibank?
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 It isn't a new law at all. That has been a requirement of savings accounts for at least the last 20+ years. Enforcing the seven day written notice is rare, but it has been a part of your contract with your bank for a very long time.
Now for clarification, a checking account, a real checking account, doesn't earn interest. A NOW account earns interest like a savings account, but is accessed by checks, like a checking account. That is technically a savings account, but it also has restricted ownership rules. John Doe can have a NOW account, but the XYZ Corp. can't. XYZ can have a Money Market Deposit Account as can John Doe, but that has limits on the number of checks that may be written, or these are not genuine checking accounts either.
We believe you or your bank are mixing the terms for a NOW account with a regular checking account (also known as a demand deposit account or DDA). A DDA won't have a seven day notice. A "checking with interest" account is actually a NOW by another name. We have read about a bank that recently had reclassified its portfolio of accounts back to NOW status. For FDIC insurance purposes, they had shifted a category of accounts from one to another. As it goes back to being a NOW, they wanted to remind customers of this requirement.
Suffice it to say that if you go to any bank and want a checking with interest account, the seven day notice will be there. By law it has to be. Imposing that rule is a totally different issue. Again, that doesn't happen often.
Published on BankingQuestions.com 3/11/10
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