How to Bypass the Six Withdrawal Limit on Savings Accounts and Make More Money with your Savings

Savings accounts are a glorious thing. Take your extra money, let someone else keep it safe for you, and get paid in return! Then when you need it, it's a simple matter of stopping by an ATM or bank, or making an electronic transfer.

With online banking, savings accounts have become even more useful due to the ability to easily move money from one account to another. No longer must you keep a large amount of money in your no-interest or low-interest checking account. Instead, the balance can collect interest in a savings account and be transferred to the checking account instantly when needed. Some bills can even be withdrawn directly from savings!

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But for those who want to truly take advantage of savings accounts and game every last cent of interest, there is a catch: savings accounts are limited by federal law to only 6 withdrawals a month. This rule is a result of the Federal Reserve's Regulation D which is used to classify different types of accounts. In short, make more than 6 withdrawals from a savings account and your bank might be required to close the account. And to be clear, withdrawals are not just getting cash from an ATM, it also includes any rearranging of funds online that removes money from an account.

So what can you do? Take advantage of online savings accounts! Online banks like ING Direct and Ally Bank allow you to easily spread your monthly withdrawals over multiple sub savings accounts and remain under the monthly limit. This method works surprisingly well and can actually make you more efficient in managing your finances. Read on to find out how!

Open a Sub Account, or Four

Many of the best online savings accounts, such as those from ING Direct and Ally Bank, allow you to create an unlimited number of sub accounts. These accounts are full-fledged savings accounts with their own account number and, most importantly, their own six withdrawal limit. There is no limit to the number of sub-accounts you can open. And, since you've already been approved for accounts through the online bank, the sub-accounts can be opened instantly.

All of the sub savings accounts will pay the same interest rate. Your money can be lumped into one account or spread out over 20 accounts, and you will make the same amount of total interest.

Additionally, each sub account can be individually named. Names like "Bills", "Savings", "Spending Money", etc. can help you better manage your finances. If you have more than six bills in a month, you can further break it down into names like, "Utilities", "Loans", and "Credit Cards", as necessary, to ensure you do not surpass the limitations. Choose whatever names you think will work best for you, but you can always change them as your finances change.

Check with your online bank for specific directions on how to open additional accounts.

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Watch for the Fifth Withdrawal

If the majority of your money is in one savings account, keep careful watch for your fifth transaction. If a sixth withdrawal were to post to the account, the remainder of the money would be stuck until the end of the month. This might not be so bad if the end of the month is near and you know no additional transactions will occur. But if you front-load the month or are uncertain of your expenses, it's best not to risk being locked out of your own money.

Instead, be proactive! As your sixth withdrawal, transfer all of your money (or as much as you might need) into a different sub-account. Now you will start over with six more transactions and not lose access to your money. It can be helpful to have a backup account on stand-by in case it is ever needed for this purpose.

Automate the Process

Now I know this all sounds exceptionally complicated, but with careful planning and set-up, the method can maximize your money with no additional effort.

The secret is to automate your monthly withdrawals and spread them amongst the requisite number of accounts. Have your credit cards, utility bills, etc. automatically deduct from a specific account. Most of these allow you to select a savings account to pay from rather than a checking account. Just be careful not to add any additional automatic withdrawals to an account that already has six scheduled.

Then, have an additional account only for the unplanned and irregular withdrawals. With this account, you are back to actively monitoring only one savings account, just like you would have been without setting up additional sub-accounts.

Make Your Money Work For You

You've worked hard to earn your money, don't let it go to waste. Every day your money sits in a no-interest or low-interest checking account, you are missing out on significant returns that will continue to earn you money when you are doing nothing.

Consider taking the time to set up some sub-accounts with online banks and maximize your money. Beat the system and defeat the six withdrawal limit!

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