Mike Schenk, chief economist for the Credit Union National Association, said he didn’t have extensive data on what the credit unions were doing. However, when he called several credit unions, he found that “most of them no longer charge these fees”. The association has long advocated lifting the transaction cap as being best for depositors, he said, and many credit unions are routinely waiving the fees anyway.
Even so, some credit unions, including Alliant and PenFed, still quote the old federal six-withdrawal limit on their websites. “If I exceed these limits, my account will be subject to an excessive transaction fee and may be closed,” says the PenFed General Savings Disclosure.
Eliminating transaction caps can transform consumer behavior, said Simon Zhen, senior research analyst at MyBankTracker.com. Savings accounts typically offer higher interest rates than checking accounts because they are designed to keep money there and grow. If the distinction between a savings account and a checking account is removed, consumers may have less reason to use checking accounts and banks may have less incentive to offer better savings account interest rates.
“If you lift the limit, what is the difference between a savings account and a checking account?” Mr. Zhen asked.
Here are some questions and answers about savings account fees:
How can I avoid excessive withdrawal fees?
Set up text or email notifications to notify you when you approach your account limit. You can also use a line of credit instead of linking your checking account to your savings account to cover overdrafts and reduce unnecessary transfers.
Savings withdrawal limits also apply to the number of transactions, not the amount. If you know you need cash out of your savings account, consider one or two larger payouts instead of several smaller ones, said Greg McBride, a financial analyst at Bankrate.com. (Regardless, some accounts may limit the total amount of cash that can be withdrawn or transferred in a single transaction.)
What are the current savings account interest rates?
Even on “high yield” accounts at online banks, which usually pay higher interest rates because they don’t have to maintain a branch network, the annual percentage returns are 0.40 or 0.50 percent – well below those that these accounts normally have have paid for a year. Still, this is better than the average savings account rate of 0.14 percent, according to DepositRates.
What if I need to withdraw funds that are beyond my account’s transaction limit?
Contact your bank to discuss your situation and request a waiver of the fee, McBride said. Banks are likely to be flexible given the ongoing economic impact of the pandemic.