Latest news with #FederalReserveBoard
Yahoo
3 days ago
- Business
- Yahoo
Regulation D and savings account withdrawal limits – here's what changed
Regulation D previously limited withdrawals from savings and money market accounts to six per statement cycle. The Federal Reserve suspended this limit in April 2020 during the coronavirus pandemic to provide greater financial flexibility. Many banks still maintain withdrawal restrictions even though they're no longer federally required to do so. Understanding your bank's current policies helps you avoid unexpected fees and choose the right account for your needs. While banks historically limited the number of transactions customers could make each month in savings and money market accounts, a pandemic-era rule change means you may now have easier access to your funds. Regulation D, or Reg. D, is a Federal Reserve Board rule that previously limited withdrawals and transfers to six each statement cycle. The Fed revised the rule in 2020, but many banks have maintained the six-transaction limit while others have increased the number of allowable withdrawals and transfers. Regulation D imposed reserve requirements on banks' deposits and other liabilities to help implement monetary policy, according to the Federal Reserve. In April 2020, reserve requirements at banks were reduced to zero percent, where they've remained for more than five years. More importantly for consumers, Reg. D previously restricted the frequency of certain types of withdrawals and transfers you could make from a savings deposit account during a statement cycle. Banks no longer have to limit the number of certain withdrawals from savings deposit accounts to six, but most still restrict withdrawals on these accounts. The regulation distinguished between different types of accounts based on their intended purpose. Checking accounts are designated as transaction accounts under Reg. D, meaning they're designed for conducting day-to-day business like bill paying and making purchases. Savings and money market accounts are classified as nontransaction accounts, intended primarily for saving money rather than frequent transactions. Bankrate insight: The regulatory rationale Regulation D was originally designed to help the Federal Reserve manage monetary policy by controlling how much money banks needed to keep in reserve. The withdrawal limits helped maintain the distinction between savings accounts meant for saving and checking accounts meant for spending. In April 2020, as Americans began navigating the economic fallout from the coronavirus pandemic, the Fed deleted the six-transaction limit from the definition of savings deposit accounts via an interim final rule. This change was made to provide consumers with greater financial flexibility during uncertain times. Some banks immediately embraced the rule change by eliminating withdrawal limits entirely. American Express National Bank, for example, previously allowed nine withdrawals per statement cycle but now places no withdrawal limits on its savings account. Understanding which transactions count toward withdrawal limits helps you manage your accounts more effectively and avoid unexpected fees. Electronic transfers such as online bill pay, automatic transfers between accounts and transfers via mobile banking apps. Outgoing wire transfers from your savings account to other banks or individuals. Debit card purchases on money market accounts (savings accounts rarely offer debit cards). Automated payments set up through your bank's bill pay service or third-party services like Zelle. Overdraft protection transfers from your savings account to cover checking account overdrafts. ATM withdrawals and in-person transactions with bank tellers are generally exempt from Reg. D restrictions, even at banks that maintain withdrawal limits. This means you can still access your money when needed, though you may need to visit an ATM or branch. Even banks that maintain withdrawal limits typically provide several ways to access your money without penalties. ATM and teller transactions remain unlimited at most institutions. You can withdraw cash at ATMs or visit a branch to speak with a teller without affecting your transaction count. and incoming transfers don't count toward withdrawal limits since they add money to your account rather than removing it. Interest payments and other bank-initiated transactions are excluded from customer transaction limits. Account-to-account transfers within the same bank may be treated differently depending on the institution's policies, so check with your specific bank. Money tip: If your bank maintains withdrawal limits, plan larger, less frequent transfers rather than multiple small ones. For example, transfer your monthly expenses in one transaction rather than paying bills individually from your savings account. Understanding your bank's current withdrawal policies is crucial when shopping for savings accounts or managing your existing accounts effectively. Account selection considerations: A savings account might not be the right choice if you need frequent access to your funds and your bank maintains strict withdrawal limits. However, if the bank allows many or unlimited withdrawals, it could work well for your needs. Fee avoidance: Many banks charge excess transaction fees of $5-$15 for each withdrawal beyond their limit. These fees can quickly add up and erode your interest earnings, especially on smaller balances. Account conversion risks: Some banks automatically convert savings accounts to checking accounts if you consistently exceed transaction limits. This conversion often comes with different fee structures and lower interest rates. Financial planning benefits: Knowing your limits helps you structure your finances more effectively. You might choose to keep more money in high-yield checking accounts for frequent transactions while using savings accounts for longer-term goals. When comparing accounts, look for institutions that either eliminate withdrawal limits entirely or make them generous enough for your needs. Online banks often offer more flexibility than traditional banks in this area. Is Regulation D still suspended? Regulation D withdrawal limits are officially suspended at the federal level, meaning banks are not required to impose the six-transaction limit. However, this suspension was implemented as an interim rule, not a permanent change. Many banks choose to maintain their own withdrawal restrictions as internal policies, so the practical impact varies by institution. What are the requirements of Regulation D? Currently, Regulation D requires banks to maintain reserve requirements (though these are set at zero percent) and classify accounts as either transaction or nontransaction accounts. The regulation no longer mandates withdrawal limits on savings accounts, but banks can choose to impose their own restrictions as part of their account terms and conditions. What happens if I exceed transaction limits? If your bank maintains withdrawal limits and you exceed them, you'll typically face excess transaction fees ranging from $5 to $15 per additional transaction. Some banks may also send warnings or temporarily restrict electronic access to your account. Repeated violations could result in your account being converted to a checking account or closed entirely. What can I do if I need cash after reaching the limit? If you've reached your monthly transaction limit, you can still access your money through ATM withdrawals or by visiting a bank branch to speak with a teller. These transactions typically don't count toward your electronic transaction limit. You can also wait until your next statement cycle begins to resume electronic transfers. How can I maximize savings under Regulation D? To optimize your savings strategy, consider keeping funds you need regular access to in a high-yield checking account or money market account with generous transaction allowances. Use traditional savings accounts for longer-term goals where you won't need frequent access. This approach helps you earn competitive rates while avoiding transaction limit issues. How can I avoid fees related to Regulation D? To avoid withdrawal limit fees, track your monthly transactions and plan larger, less frequent transfers when possible. Set up automatic transfers at the beginning of each month rather than making multiple smaller withdrawals. Consider using ATMs or visiting branches when you need cash, and choose banks that offer generous withdrawal allowances or eliminate limits entirely.
USA Today
16-05-2025
- Business
- USA Today
Trump administration suggests it's not seeking power over the Federal Reserve
Trump administration suggests it's not seeking power over the Federal Reserve Show Caption Hide Caption What we know now about the Trump agenda and if it can be slowed down It has delighted supporters and alarmed opposition, but can the Trump agenda overcome Congress and legal challenges? Here is what we know now. A lawyer for the Trump administration said Friday that its attempts to expand the president's power to fire people may not extend to the ability to fire the head of the Federal Reserve Board. "Nothing that we do here dictates what happens to the Fed, full stop," Harry Graver, a lawyer for the Department of Justice, said Friday under questioning from judges from the U.S. Court of Appeals for the D.C. Circuit. Trump fired members of National Labor Relations Board and the Merit Systems Protection Board, which handle worker complaints in the private and public sectors, despite laws protecting their jobs while they serve set terms. The Trump administration says those protections are unconstitutional. The Trump administration has already asked the Supreme Court to take up the case promptly, causing concern over whether the head of the Federal Reserve Board, who has similar job protections, could be at risk should the Supreme Court rule in the administration's favor. Trump has a long history of attacking Federal Reserve Chair Jerome Powell. Trump said in April that Powell's "termination cannot come fast enough!" and called Powell "a major loser." Trump backed off days later as financial markets went into a frenzy, but lashed out again this month after Powell declined to cut interest rates. "The Federal Reserve I think presents a distinct constitutional question not before this court," Graver told the judges, who said they have received multiple arguments from outside parties saying the case affects the central bank. Judge Florence Pan pressed Graver to explain why the Federal Reserve should be carved out as an exception to boards Trump should have control over, but the labor boards should not. "With respect to monetary policy, the core function of the Fed, we have not taken a position, because it's a hard historical question," Graver said. Humphreys Executor: How Trump's firings could expand presidential power Earlier in the hearing, Graver made the administration's argument that any entity that exercises executive power must be answerable to the president, because he is answerable to the people. The legal argument was a key underlying principle within Project 2025, which Democrats argued created too much centralized power. "The way in which the executive branch should work turns on accountability," Graver said. "It is a unitary, energetic executive that answers to the people."
Yahoo
15-05-2025
- Business
- Yahoo
Here's how much money you should have saved for retirement based on your age
Retirement is the dream of every worker, but it can also be a source of dread and anxiety because the money needed to do so in comfort is out of reach for many Americans. According to a recent study by Northwestern Mutual, Americans felt they would need $1.26 million saved up in order to retire comfortably. But most people have nowhere near that, even as they approach retirement. The median net worth (meaning all of the assets and minus liabilities) of Americans between 65-74 years old is $410,000, according to the Federal Reserve Board's 2022 Survey of Consumer Finances, which is its most recently available data. And that's including everything they own — a home, savings accounts, and their retirement funds. For Americans under 35, the median net worth is just $39,040. More than half of Americans surveyed (51 percent) told Northwestern Mutual that they think they are somewhat or very likely to outlive their savings. 75 and older $334,700 65-74 $410,000 55-64 $364,270 45-54 $246,700 35-44 $135,300 Less than 35 $39,040 Which is unsurprising considering the median average annual salary in the US is just $59,384, according to the Social Security Administration. So how are you supposed to save for retirement without winning the lottery or hoping for an unexpected inheritance? According the advice of numerous financial institutions, it's by setting savings goals early, sticking to them, and making sure your money makes money through compound interest and investments, even if you're watching Donald Trump's tariffs send the markets plummeting. 'I think whats important now — what happens every time we have a volatile market dip — is that people read the headlines and they get scared. The younger generation might see that and decide not to invest, and that's what I fear,' Catherine Valega, a Certified Financial Planner, told The Independent. 'Look at this as an opportunity to buy stocks. Increase your contribution to your 401k or a Roth IRA. Don't let the markets scare you off, because I'll tell you what — the billionaires are all buying while everyone else is selling.' According to Fidelity Investments' retirement planning tips, a good rule of thumb for Americans looking to retire comfortably is to save 10 times your income if you're hoping to retire by age 67. That includes money in any retirement accounts or investments, CNBC reports. Breaking that down further by decade, Fidelity recommends that by age 30, Americans should have the equivalent of your annual salary saved up. If you're making $55,000, aim to have $55,000 saved. By the time a worker hits 40, they should, according to the investment company, have three times their income saved. By 50, that number should be six times their income, and by 60 it should be approximately eight times their income. That breakdown tends to be the standard shared by many financial experts with some minor disparities. Ally Bank's breakdown for retirement saving is similar to what's presented by Fidelity; at 30, have the equivalent of your annual income in the bank, by 40 have three times your income saved, at 50 aim for five times your income, and at 60 you're recommended to have seven times your income saved up for retirement. 'We want to save as much as we can, as soon as we can, and [be investing] as aggressively as we can,' Valega told The Independent. 'It's never too early or too late to start investing, quite honestly. If you missed the boat, lets get on it now.' Both Fidelity and Ally advise that it's important to keep in mind that those benchmarks are guidelines, and that an individual's retirement goals and personal circumstances must be factored in. And if you're not on track, remember that most others aren't either — 17 percent of Americans, regardless of age, have less than their annual income saved for retirement, according to Northwestern Mutual. how much Fidelity recommends you have saved if you want to retire at 67 Lifestyle is another important consideration. If a worker wants to spend their retirement traveling the world, eating good food, lavishing their loved ones with substantial inheritances, those goals need to be accounted for in advance. Where a person retires can be just as important. Some areas of the country are more expensive to live in than others. Some are more prone to disasters. Florida has long held a reputation for being the locale of choice for retirees, but repairing home and property damage caused by flooding and hurricanes can quickly eat into one's retirement savings if they don't plan for those potential costs. 'I'm in New England, and we used to advise people to retire with $2 million to have a comfortable retirement,' Valega said, who works with fairly wealthy clients. 'Now I want my clients to have $3 and $4 million saved in their retirement accounts to maintain the type of life they're accustomed to. So it depends a lot on where you live, and where you want to live.' White $284,310 Hispanic $62,120 Black $44,100 Other $132,200 Climate, activities, and proximity to loved ones all factor into those decisions, and thus must factor in to how one plans for their retirement. If a person has loved ones in several cities, they may want to plan to save up enough money to cover transportation for visits, or enough to afford a home or an apartment with a guest room. In order to actually manage to save up all the money needed to retire in relative comfort, financial experts suggested using a 50/30/20 budget frame work. According to the 50/30/20 framework, people should, after taxes, take 20 percent of their income and put it toward savings and debt repayment, and 50 percent should go to needs, while 30 percent should go to wants. The money set aside for savings ideally should be placed into high yield savings accounts, retirement accounts and investments into the stock market. Taking advantage of compound interest — that is, interest that builds on interest earned — is a top recommendation from virtually all of the major retirement planning experts. amount Americans believe they need to retire comfortably 'Given that we have more uncertainty than ever, I think it's so important to get money working for you in stocks and assets like real estate. You do want to be smart — if it comes down to someone enjoying a luxury like a trip or investing a few hundred bucks, I'd probably tell you to go with the investment,' Valega said. A good place to start, according to Fidelity, is investing in a standard index fund that tracks the S&P 500, as its more diversified than buying individual stocks like a day trader might. Most major brokers have S&P 500 fund or ETF like Vanguard. Perhaps the most important tip that financial experts have recommended has less to do with the technical side of budgeting and investing and more to do with perspective. All of this advice — saving more than a million dollars, hitting decade benchmarks, navigating the stock market — can seem daunting, but setting short term goals can help alleviate some of that stress, since the worst thing you can do is nothing at all.
The Age
14-05-2025
- Business
- The Age
US inflation is the calm before Trump's tariff storm
The latest US inflation data shows a glimpse of what might have been: an inflation rate falling steadily towards the Federal Reserve Board's target, lower interest rates and a growing economy. Alas, the data doesn't capture the impact of Donald Trump's global trade war, which probably won't start to surface until next month and won't be fully reflected until well into the second half of the year. The consumer price index for April confirms that, when Joe Biden handed over stewardship of the world's largest economy to Trump in January, the US was in good shape. The economy was growing, until the initial impact of the trade war – a scramble by importers to get in ahead of the tariffs – produced a contraction in the March quarter. Inflation was gradually receding. The headline inflation rate rose 2.3 per cent in April, the lowest rise since February 2021, when the supply chain shock from the pandemic was about to gather momentum and send prices soaring. Core inflation – excluding volatile food and energy prices – rose at a 2.1 per cent annual rate over the three months to end-April, marginally above the Fed's 2 per cent target. That is, of course, old news. Trump announced his main tariff plans – a10 per cent universal baseline tariff of 10 per cent, 'reciprocal' tariffs of up to 100 per cent on the 90-odd countries with whom the US has a trade deficit and 145 per cent on China – on his so-called 'Liberation Day' on April 2, with the tariffs coming into effect a week or so later. It will be interesting to see how the markets, the Fed and Trump respond when that damage finally surfaces, as it eventually will. With companies and consumers rushing to get in ahead of the expected price rises – 'front loading' their purchases – the impact of the tariffs was always going to be delayed. Then Trump paused the reciprocal tariffs for 90 days until July, and then, after last weekend's truce with China, which saw that tariff reduced to 30 per cent and China's 125 per cent retaliatory tariff cut to 10 per cent, paused that confrontation until August.
Sydney Morning Herald
14-05-2025
- Business
- Sydney Morning Herald
US inflation is the calm before Trump's tariff storm
The latest US inflation data shows a glimpse of what might have been: an inflation rate falling steadily towards the Federal Reserve Board's target, lower interest rates and a growing economy. Alas, the data doesn't capture the impact of Donald Trump's global trade war, which probably won't start to surface until next month and won't be fully reflected until well into the second half of the year. The consumer price index for April confirms that, when Joe Biden handed over stewardship of the world's largest economy to Trump in January, the US was in good shape. The economy was growing, until the initial impact of the trade war – a scramble by importers to get in ahead of the tariffs – produced a contraction in the March quarter. Inflation was gradually receding. The headline inflation rate rose 2.3 per cent in April, the lowest rise since February 2021, when the supply chain shock from the pandemic was about to gather momentum and send prices soaring. Core inflation – excluding volatile food and energy prices – rose at a 2.1 per cent annual rate over the three months to end-April, marginally above the Fed's 2 per cent target. That is, of course, old news. Trump announced his main tariff plans – a10 per cent universal baseline tariff of 10 per cent, 'reciprocal' tariffs of up to 100 per cent on the 90-odd countries with whom the US has a trade deficit and 145 per cent on China – on his so-called 'Liberation Day' on April 2, with the tariffs coming into effect a week or so later. It will be interesting to see how the markets, the Fed and Trump respond when that damage finally surfaces, as it eventually will. With companies and consumers rushing to get in ahead of the expected price rises – 'front loading' their purchases – the impact of the tariffs was always going to be delayed. Then Trump paused the reciprocal tariffs for 90 days until July, and then, after last weekend's truce with China, which saw that tariff reduced to 30 per cent and China's 125 per cent retaliatory tariff cut to 10 per cent, paused that confrontation until August.
