Thats odd. As I understand Reg D it does NOT apply to transfers between accounts with the same registrations at the same institution. Are these transfers from (for example) a joint account to an individual account?

Also the limitation is not put in place by the FDIC, they do nothing but insure your money. The 6 withdrawal limitation is part of Regulation D from the Federal Reserve Board.

Supposedly this is to protect against money laundering and other activities that "terrorists" engage in.

My bank slapped me with a $5 service charge because we made more than 6 withdrawls (ATM, debit card, and transfers to other accounts) in one month. They didn't threaten to close the account, just charged us for doing it.

This was even applied to transfers from my savings to checking accounts at the same bank, accessed from the same ATM/debit card and online banking ID & password.

It boggles the mind that one can't freely move money between two accounts in the same financial institution to maximize collecting interest on one's funds. I barely even use the savings account at that bank now; except for the delay in getting the funds, I'd rather use my credit union which offers a much better interest rate.

Thanks, Tom. It is the FRB that sets this regulation.

According to the ING Direct service rep, transfers from one savings account to another within the same login identity do count as withdrawals for this purpose. And to answer your question, the transfers were not between a joint account and an individual account.

Otherwise, I don't think I would have received the notice.

I got that exact same letter from ING last month. In fact I got it the day before an auto transfer was to go through (the one that would have closed my acct.). Now I have future deposits withdrawn from my brick and mortar checking acct. Not sure if I'll open and ING checking acct.

I didn't even know about this. Thanks for the warning, though I'm sorry it comes at your potential expense.

I'll have to give myself the heads up. Luckily, I'm trying to make my transfers one-way IN rather than OUT. :-)

Why not just do most of your transactions out of an Electric Orange account? Sure, you "only" earn 4%, but you get unlimited transfers.

Funny, my brick and mortar rule is

- no more than 6 withdraws a quarter, for balances under $1,000. No limits when the balance is above $1,000.

This is why I have the kids with emergency balances of $1,000 minimum in their brick and mortar accounts. Less chance for trouble.

I read this before elsewhere....maybe I need to look into it farther. Is your ING Account maintaining a minimum of $1,000?

dakboy, this has nearly NOTHING to do with fighting terrorism. Reg D was established in the late 70's I belive and its purpose is to help bank manage their cash reserves.

D, your bank apparently has their own restrictions in addition to Reg D. Also, ING accounts have no minimums. (Except CDs?)

If anyone has a few dozen hours to kill, here is Regulation D in all its glory: http://www.federalreserve.gov/regulations/#d

This is something that I have long had a problem with. I got hit with this a few months out of college and it caused my rent not to be paid at the time. I had automatic withdrawals setup and that one was over the limit so it didn't go. I got charged by just about everyone in that situation.

My big problem is not so much that they have the rule, but more with the fact that they do not easily have a way for us to find out how many we have used. They obviously know the number as they know when we are over it...it should be displayed in huge, bold numbers when we login to the bank site how many we have used so far in a month. Why is it such a big secret.

It's times like this that I really appreciate these no-fees accounts. At a regular bank, you would've just been slapped with repeated fees. They probably wouldn't have even written you a letter, you would just see a bunch of fees on your next statement, then call to inquire.

Also, everyone should get a high yield online checking account to handle their transactions. The online savings should not be used to make payments.

I second the suggestion to use Electric Orange. I direct deposit and make as many other deposits as I want into my online savings (I use HSBC right now), but I only withdraw money once a month. I'm getting less interest on the Electric Orange account, but I'm free to do as many transfers in and out of the account as I want.

No matter how they wrap it in federal regulations, it boils down to banks making more from your money. With electronic transfers we consumers don't really need checking accounts any more. I could do all by banking with a savings account except for the very rare occasion of actually having to hand someone a personal check (about twice in the past year).

Banks and credit unions usually pay more interest on savings accounts, so I would rather keep my cash there than in a low- or non-interest-bearing checking account. With these withdrawal limits, I am not allowed to use my savings to routine business because that would create too many transactions. I have to keep a higher balance in the lowest interest checking account, even though I rarely write any checks. The banks profits go up.

You learn over time how much many you spend every month and how to space out your 6 transfers out per month. I'm down to 2 automateds and 1 manual which still leaves me 3 for random things that crop up.

The other strategy is to buy stock for the bank you do business at to dilute the fee dinging, no/low interest. If they're making a profit off you, at least take some of that profit back at the stock level.

I got that message from HSBC. Had thought it was a limit on six transactions. Will check to see if that is just withdrawals. There are two ways to get around this:

1. Have a money market account instead of a savings account.

2. Use multiple savings accounts.

moom,

A money market account (assuming you are talking about a deposit account and not an investment account) is still considered to be a savings account and subject to the same limit of 6 withdrawals. The only difference with a MM is that of those 6 withdrawals, 3 of them can be checks.

I actually had this happen as well. I wish ING would educate people that have the ING Savings accounts of this stipulation. Thankfully, the Electric Orange account does not have this stipulation. Just open one of those and you should be able to withdraw as many times as you like!

Not to move the comments off topic, but does anyone know the requirments to open a Electronic Orange account?

I tried to do so recently and was told that "I do not qualify to open an account."

Hmm, I'm still confused by what kind of transfers were taking place within ING that would have caused this happpen? Was it CD purchases?

I personally think that a online savings account should be used supplemental to a checking account (hopefully one that pays interest).

Dong: If you have two ING Direct savings accounts using the same log-in, a transfer from Savings Account A to Savings Account B counts as a withdrawal for Savings Account A, even though both accounts are owned by the same identity.

Now that I have an ING Direct checking account, I should just make that the primary account I use for direct deposit at work, and then distribute from there appropriately.

Wow, they are NOT playing. :)

At least they sent a really sweet letter and didn't charge a bunch of fees. I am very very afraid of fees.

Love your blog :)

Hmmm... I've had an ING savings since January, I just opened an Electric Orange account two weeks ago, no problem, but a small overdraft buffer was allocated. I wanted a second debit card account as a hedge against problems (charge errors, scams, etc.) with my primary debit card account. To me, the presence of the debit card means that the Electric Orange is useless as a normal checking account, because scams on the card can cause payment failures. My other debit card is on a dedicated account also. That aside, I think the transparent orange stripe is cute.

On the issue of sub-accounts, I didn't know about them. I created a single savings account, and sub-divided it with a spreadsheet. Each line of the sheet is an account: trip, medical, emergency fund, and such. I can shuttle money between "accounts" as much as I like because it's all in the sheet, ING just sees the large blob of money that gets added to and occasionally subtracted from.

Buried in the details of the Electric Orange descriptives is an interesting tid-bit. It is hidden from the customer visually, but EO is actually a matched checking and savings account pair. At the beginning of the month, all money is transferred to the savings. For the first five withdrawals,the money jumps to the checking then pays out. On the sixth withdrawal, all remaining money is transferred from the savings to the checking and further withdrawals pay out of the checking directly. (Cripes, I actually remembered that!) I'm not sure why they do this.

This was a great checking account. I say "was" because apparently, after hyping the Electric Orange account via e-mail and a number of postal mail blasts to existing Orange Savings customers, ING thought better of their offering and decided to exercise their rights outlined in the very small fine print of the disclosure agreement; checking the credit scores of those they invited to open an account 60 or more days after opening them.

I received an e-mail from ING yesterday at 4pm informing me that they had obtained my credit score from a consumer reporting agency and had decided to close my Electric Orange account and reduced my overdraft line of credit to $0.I was, however invited to re-apply after a 30 day wait. I called the customer service line to protest advising them that I had been a long term customer since 2003, had used my overdraft only three times and had paid it back promptly, even before the payment was due. I also reminded the representative that I had a regular deposit which was coming directly from my paycheck, all to no avail. They had made a decision and had no intention of reversing it, despite the fact that their major pitch in advertising the Electric Orange account was that they would not, in their own words, "Ding your credit with an inquiry". I also made nowhere near the six withdrawals from my savings that are mentioned here.

The representative placed me on hold to speak further with a manager, and left me there. I hung up and redialed as I decided to close all of my accounts with ING. I got another representative who explained that the institution had recently decided to exercise its right under the disclosure agreement and run credit checks across the board. I assume they decided that they had openened themselves up to a great deal of financial risk by giving everyone who opened an account an open ended $165 line of credit. I pity the individual who came up with that idea. In hindsight, I suppose I was naive in thinking that a bank as large and profitable as ING could be successful offering such an "unsecured" product. Needless to say, I have decided that this across the board decision, along with the 3-4 business day delay in moving money between linked accounts, and the additional delay in crediting "good" funds received from an electronic deposit, is a little more than I am willing to put up with as a good customer.

I have closed my ING accounts and transferred my money to an institution that treats its customers with a little more respect and courtesy than what they afforded me in this situation. I doubt that my little piece of business will make much of a dent in their profitable operation, but I feel an obligation to let everyone know about what I consider to be a dirty, underhanded trick.

Bill,
I had the same thing happen to me. Got the email last week saying the account would close in 30 days and the overdraft was $0. Today I got an email from the COO, apologizing and reinstating the account and overdraft to the full $1000. I called customer no-service and they only knew that it happened to a wide number of people but had no real reason why or any explanation. I am hesitant to start using the account again though because when they close it like that, it locks the debit card, whether or not there is money there to cover the transaction.

Thanks Chip. I also received the same e-mail. I also read that Liz Pulliam Weston (a financial writer on MSNBC) called the CEO of ING Direct USA and was told that an error had been made and that the e-mail we received was sent out to 5300 customers who shouldn't have received it. The did close many accounts, but they sent 5300 too many e-mails to those they didn't close. I have called customer service on numerous occasions and never held for over a minute. Tonight there were more than 40 people on hold when I called. The rep apologized profusely saying that they had actually increased my OLOC. I advised her that I had already shredded my debit card and initiated a transfer of all my funds to my local bank. I told her I would need to think about whether or not I would consider continuing to do business with them. She ordered me a new debit card, but I am not entirely convinced. I know people make errors, but when you are dealing with people's finances, it requires an extra amount of care, courtesy and special handling. This was not the case in this situation, and no matter how well they treated me in the past, it will be very difficult to win my trust or my business, for that matter, back to an institution that made such an egregious error (if in fact there ever was an error at all). I am even more inclined to believe that 5300 people made a run on the bank, filing transfer orders and threatening to cost them a lot on defaulted balances on overdraft lines of credit. There will be some re-thinking of what was done and how it was handled. I just have to decide whether I want to be party to the re-thinking or their next great idea at protecting their assets. Would you want a company who made this huge a mistake managing YOUR money?

Bill

yes yes it happened to me to although they close both my checking for bad credit after i had it for a year, and my savings because I had 1.00 in it. I though savings was just that savings there was no time limit to save up your money?? apparently not i had my savings for 4 years and they closed both of them. A Total shame. It is just wrong. How can they do that???

I am a ING Direct call center associate who takes customers calls all day long and I can assure you that we never open Electric Orange accounts without letting the customer know that their credit will be checked. If we are caught not telling a customer we will receive an error which is very bad and can lead to termination if too many happen. We do periodically review credit and close accounts if a customer's score has dropped below an acceptable level or the overdraft line of credit is abused. No one has an Electric Orange account who wasn't "approved" first by having their credit checked. ING has to protect itself from people who abuse our products or we would not be able to have some of the highest interest rates in the country with no fees or minimums. As far as the six withdrawal limit on savings accounts goes (a completely seperate issue) our limit is six withdrawals per month per account regardless of whether they are internal or external. This is a federal government regulation and common practice throughout the banking industry. We send letters to our customers three times prior warning them that their accounts will be closed if they continue to exceed the limit. Once the accounts are closed they can reopen it the next day. We are very transparent with our customers so a lot of things we do that customers may not like are being done by other institutions but they are not telling their customers. Anyway ING Direct is a good honest company and a great employer. I think anyone who doesn't bank with us is missing out.