Savings Bank Account Rules

Savings accounts are a safe way for consumers to save money as their budget allows. The U.S. Federal Reserve is one agency that regulates the banking industry. Regulation D, 12 CFR 204.2 outlines the procedures banks must follow when opening and maintaining savings accounts. These rules make savings accounts more attractive so that consumers can save for a college education or establish a child’s first bank account.

Opening a Savings Account

The U.S. Patriot Act was designed to prevent financial crimes and combat terrorism. The Act mandates that anyone who wants to open an account at a financial institution provide identification. Forms of acceptable identification include a state-issued ID card or a driver’s license. Customers under age 18 or who are students may have to produce additional ID in the form of a birth certificate or student ID card. Social security numbers and proof of citizenship are also required before a bank will open an account.

Funding Requirements

Regulation D mandates that a savings account be funded when it is opened. The funding can be in the form of a cash deposit, a check or an incoming wire. If you already have an account at the bank, such as a checking or money market account, you can transfer money from one of these accounts into your savings account. Each bank sets the minimum amount that is required to open a savings account. Some savings accounts can be opened with as little as $25. Banks can also require the account holder to keep a minimum balance or be subjected to a service charge.

Account Withdrawals and Transfers

Savings deposit holders are allowed to make a maximum of six withdrawals or transfers over a four-week period or per the bank’s statement period. Some transactions, like transfers between accounts held by the same depositor or in-person or ATM withdrawals, don't count against this limit. Although Regulation D does not limit the number or type of deposits that the account owner can make, individual banks can put a dollar limit on the amount of the deposit.

Fees and Service Charges

Savings account holders can be charged a fee or service charge for exceeding the maximum six withdrawals and transfers. If the account holder continues making excessive withdrawals or transfers, the bank can close the savings account and open a checking account without the account holder's consent.

Interest Rates

The Federal Reserve sets the interest rates, but the banks are not obliged to follow them. Banks decide how much interest they will pay on saving and deposit accounts. Savings accounts carry FDIC insurance and thus are safe, low-risk accounts. As a result, saving accounts often offer the lowest interest rates. Online banks may often offer better interest rates because they don't have to maintain brick-and-mortar branches and related overhead costs.