The change will go into effect as soon as it’s published in the Federal Register, which could happen as early as this week.
The Fed has rewritten a rule that was originally designed to help banks maintain reserve requirements — minimum amounts of cash they must keep on hand — and prevent sudden withdrawals that could make it hard for them to meet their obligations.
However, last month the Fed reduced reserve requirements to zero in the wake of the coronavirus pandemic, making transaction limits on savings accounts unnecessary.
Why savings matter
Even though the limits have been lifted, that doesn’t mean you should pull out all of your savings — no matter how tempting.
Moving some cash around during the COVID-19 crisis may be necessary, but most financial advisers recommend keeping enough emergency savings on hand to cover at least six months’ worth of your regular expenses.
If you want to make the most of your emergency fund, you might consider putting it into a high-yield account, like Aspiration’s Spend & Save account, where it will accumulate more interest and grow over time.
Why the Fed did what it did
Millions of American jobs have been affected by the pandemic, and the removal of transaction limits will make it easier for people whose incomes have been reduced to meet their basic needs.
“It is important consumers have the flexibility they need to freely transfer essential funds between their accounts to cover everyday expenses and manage their personal finances,” says Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions.
In the past, exceeding your monthly transaction limit could lead to fees, declined transactions, or even the closure of your account.
But now you can transfer money freely between your checking and savings accounts without having to worry about being penalized.
You’ll have more flexibility to use your savings to help support your family while times are tough.