Personal Finance Blog by Debit versus Credit

Regulation D Is Outdated

June 5, 2008 | Filed in: Miscellaneous | 3 comments

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I understand the purpose of a savings account completely: they are to be used to put money into and to keep it there.  However it would be an insane idea to think that one would not have the ability to access that money with any level of ease.  The Federal Reserve however seems to think otherwise; convenience to them is not something that we as consumers should be allowed to have when it comes to accessing our money.  Let me explain.

Last month I switched to a new brokerage account and transferred money from my savings to the brokerage account several times.  I also payed off a large credit card bill with money from my savings.  I also miscalculated the amount that I could transfer to my savings from my checking without leaving myself short on cash in the checking account.  I messed up, just a little bit.  I had to transfer money back from my savings to my checking to cover some basic expenses.  Pretty simple mistake to make really… I’m sure just about everyone out there has done that at some point in their life.

The point is that I made several transfers from my savings to my checking account throughout the month of May, as well as a few ACH transfers from my savings to my new brokerage account.  The problem with this is - as some of you may be aware - that the Federal Reserve board has set limitations on the number of transfers you can do OUT of your savings accounts in any given month.  The limit?  Six.  Oops… I went WAY over that.  So at the end of the month I notice a fee in my account for excessive transfers.  There goes my interest for the last five months.  Naturally I called my bank (USAA) to ask them to reverse the fee.  After I asked they offered to reverse half of it, which I gladly accepted.

I decided to do some research after this fiasco to learn more about the Federal Regulation that has caused me so much grief.  It’s called Regulation D and it can be found at the Fed’s Reg D site but so as to alleviate the pain that you would encounter trying to read such legal mumbo-jumbo I will paraphrase the relevant parts of Reg D…. right after I quote directly from it.

the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle . . . to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order, or instruction, and no more than three of the six such transfers may be made by check, draft, debit card, or similar order made by the depositor and payable to third parties

That part is pretty straightforward.  You (as the depositor) are not authorized to take money out of your savings account more than six times a month (either by withdrawal or transfer) unless you do so at an ATM or at one of your banks branches.

Ok.  I understand the reasoning for the limits on taking money out of a savings account - after all it should not be used like a checking account (in that you take money out of it on a daily basis).  There should not be any reason, however, to limit a person to six or less convenient withdrawals or transfers from their savings account.

We are in a new age today.  We’re more technology savvy than any previous generation has ever been.  We demand convenience.  In the age of internet banking where I can literally do all of my banking without ever leaving my house there should be no reason to limit transfers from a savings account to six.  I understand the limit (a savings after all is not a transaction account), but six is just… not enough.  These limits were set in the 1980s when Reg D was first enacted.  If you ask me it’s more than just a little outdated.  When this was created the internet was hardly even known to be in existence, let alone internet banking.  If you ask me it’s time for a revision.

What do you think?

Tags: ACH Withdrawals, Federal Reserve, Rants, Regulation D, Savings Transfer Limits

Greed, Poor Management.. or Both?

October 20, 2007 | Filed in: Business/Entrepreneurship, Miscellaneous | No comment

If you try to keep up on business news like I do, then by now you have read about Intel and their third-quarter record sales. These record sales can be attributed to strong demand for laptop and notebook computers (on a side note, I do wonder how much of this can be attributed to the strong sales of Apple’s Macbook and Macbook Pro line of notebooks). The company reported third-quarter sales of $10.09 billion, which is 15% higher than their third-quarter sales in 2006. Their net income for the quarter was reported as $1.86 billion, which is 43% higher than their third-quarter of 2006 net income of $1.30 billion dollars. Their short-term debt is down from their second-quarter reports, their long-term debt is at about the same level and their cash and cash-equivalents (this means any short-term investments and cash - anything which can be accessed as cash within a years time) are up about $1.8 billion dollars.

It seems that all is well at Intel; profits are up, income is up, debt appears to be decreasing and costs are down when comparing the past three quarters to the same period in 2006. This is fantastic news for Intel when one considers the shocking revelation they received last year; they had their first revenue shortfall in 3 years and were losing market share to their considerably smaller competitor Advanced Micro Devices, otherwise known as AMD. Upon realization of their shortcomings they launched a major restructuring and dropped money-losing businesses, cut 10,000 jobs and pushed new products to the market. At first glance it seems that things are looking up for Intel, in fact one might even say they are going very well. However it seems that there is something they’re not telling us.

The Arizona Republic reported on October 17 that Intel sales hit a third-quarter record. In this same article they reported that Intel announced it would be cutting 2,000 jobs in the fourth quarter of 2007. It should be noted that this is on top of the 10,000 jobs that they have already cut. Nothing seems to add up with this announcement. Their profits are high, their expenses are down and their sales are up, and yet they announce new job cuts? Are they just being greedy and cutting jobs for the sake of further increasing profits and inflating their stock’s value? Is this due to poor management? Playing the devils advocate I’ll ask if maybe these jobs are being cut to make way for new jobs? Or is there something else that we don’t know, something that hasn’t been found on the books and that hasn’t been reported?

What do you think? I’d like to get an active discussion going on this topic if possible, so please leave your comments.

Tags: Rants

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