Bitcoins & U.S. Savings/Money Market Accounts? DON’T!

There is a regulation in the U.S. that most non-bankers don’t know about, and aren’t even informed of, until it’s too late: Federal Reserve Board Regulation D (Reg D).

The long and the short of it: Don’t want to get screwed? Keep your savings/money market withdrawals (including bill payments, online payments or purchases of any kind, even transfers to your own checking account) under 6 per month. Don’t want that limit? Just use a checking account.

When I started to seriously trade in Bitcoins, I was unaware of Reg D. I was using a third-party payment processor (PP) where I’d linked my savings account. At the time I linked it, there was no warning from PP of Reg D, and I don’t remember getting a notice from my institution in the nearly 2 decades I’d had an account there. I ended up doing 9 withdrawals that month, and was charged three $25 “convenience fees” to have the payments “pushed” through, despite Reg D. The kicker? This was at a credit union, not an “evil bank, where they charge fees on everything, even to ask about fees”, if you’ve seen that commercial.

How did I permanently get out from under the Reg D shadow, and how can you? I switched all links and automatic bill pays to/from my savings account to checking instead, asked that the savings account be closed and funds thereof be moved to checking. Since I have no-fee, no-minimum balance, no-direct deposit required checking, the solution was obvious. At 0.10% APY for savings, and only slightly more for money market, there was little reason to keep either type of account, especially if the interest was wiped out by “convenience fees”. Thankfully, one of the “convenience fees” was reversed in recognition of my Reg D prevention tactic, so I was able to reduce my USD/BTC exchange rate, and recover the loss faster than originally expected.

There are a number of exemptions to Reg D’s limit of 6 withdrawals, but other than paying off your loans/credit cards at the same institution, they require using 20th century banking methods (speaking to a teller in person, using an ATM, sending postal mail or a messenger(!), or calling your institution).

The National Association of Federal Credit Unions has a PDF brochure about Reg D here.

If you can recommend any institutions with free checking accounts, please leave a comment. If you like this article, please support me by donating here or viewing my inventory here.

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