Internet Banking and the Six Transaction Limit
Barbara Hurst, BOL Guru
Guru BIOS
Question: In a recent edition of the HOTLINE a question was asked on the Q & A page about money markets and the six transactions per month versus unlimited. There is still something that I am unclear about. If a depositor does Internet banking, he sits at his computer to transfer funds from his money market account to his checking account. Shouldn't that be unlimited? The funds are not being issued to a third party, and they're only going from one of his accounts to another.
Answer: You can go to the commentary of Regulation D - 2-342.22 for the answer. It reads, in part: Question 4: Verify that the following list correctly categorizes the transactions that fall within each category:
Three transaction limit - Point of sale transactions with either ATM or credit card company debit cards and withdrawals payable to third parties initiated by checks or drafts.
Six transaction limit: Preauthorized transfers through ACH or EFT; automatic transfers for overdraft protection; telephone, fax, and computer transactions to transfer funds to another account at the same institution (emphasis is the editor's); transfers between a parent's account and his or her child's account; and withdrawals initiated by telephone where the proceeds are paid to third parties.
Unlimited. Transfers to pay loans at the same institution; withdrawals made (1) in person, (2) at an ATM (3) by messenger, or (4) by mail (via a check sent to the depositor; telephone withdrawals where the withdrawn funds are mailed to the account holder; and transfers between accounts of the depositor at the same institution initiated (1) in person, (2) by mail, (3) by ATM or (4) by messenger.
Bottom line? Yes, Internet transfers count as one of the six. Like you, I can't say I understand or agree with Fed's reasoning, but there it is.
(Our thanks to John Fields, Supervisory Examiner, Philadelphia Federal Reserve)
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 13, No. 12, 2/04
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