Savings accounts are built to help you grow your balance over time and reach your goals. As such, your bank or credit union might impose certain limits and restrictions to prevent you from dipping into your funds too often, also known as withdrawal limits.

These limits aren’t meant to stop you from accessing your funds altogether, but they do help you keep track of your spending and keep you accountable toward your savings goals.

What are withdrawal limits and why do financial institutions set them?

Withdrawal limits are typically set at six penalty-free withdrawals per month from your savings account or money market account. Before the coronavirus pandemic, this limit was set by the Federal Reserve, known as Federal Regulation D.

Regulation D requires that an account, to be classified as a ‘‘savings deposit,’’ must not permit more than six convenient transfers or withdrawals per month from the account. Transfers and withdrawals that are considered ‘‘convenient’’ when “made by preauthorized, automatic, telephonic agreement, order or instruction, or by check, debit card, or similar order made by the depositor and payable to third parties.”

Withdrawal limits aren’t just a tool for you to keep your spending in check, they’re also put in place to ensure that your bank meets its reserve requirements and always has enough money for its day-to-day operations.

In 2020, the Fed rolled back this regulation to provide consumers with some financial relief. Still, many financial institutions have opted to keep this limit in place.

Federal withdrawal limits don’t count ATM withdrawals or in-person bank withdrawals toward your limit, though they may still put penalties in place for those, it does include online transfers, transfers made over the phone, withdrawals made by a check, outgoing wire transfers, Zelle payments from your savings account, or transfers made from your savings account to a checking account to cover an overdraft.

What happens if you hit your savings account withdrawal limit?

If you make more than the maximum number of withdrawals from your savings account within a given month, you could face steep penalties such as:

• Withdrawal fees: Your bank may charge a fee for exceeding the six-per-month limit during a given month or statement period. This fee might be expressed as a flat dollar amount or as a percentage of the amount withdrawn.

• Interest rate reduction: If you’re currently putting your savings in a high-yield savings account, your bank might reduce that annual percentage yield (APY) if you’re making too many withdrawals and hitting your transaction limit. This could significantly impact your savings potential over time.

• Account restrictions: If your bank notices that you’re making a habit of going over your withdrawal limit, it may start to impose restrictions on your account and prevent you from making any more withdrawals for the rest of the given statement period.

• Account closure: Your bank may also explore the possibility of closing your savings account altogether. This isn’t a first resort, but it’s not totally outside the realm of possibility if you’re repeatedly going over your limit or breaking any other rules in your account agreement.

Keeping your savings account withdrawals to a minimum

Excess withdrawal fees can eat into your savings and make it harder to build up your account balance and reach your goals. However, you can use strategies to avoid hitting the limit set by your financial institution.

Make larger withdrawals to avoid recurring withdrawals

If you absolutely need to dip into your savings, it could make more sense to make one large withdrawal to cover your expense, rather than withdrawing a small amount and realizing you’ll need more money within your statement period.

Use your checking account for recurring transactions

Recurring payments taken out of your savings account will count toward your withdrawal limit. Say you have a student loan payment or car payment coming out of your savings account each month, that will limit the number of withdrawals you can make from your account. Instead, set up recurring payments to come out of your checking account, rather than your savings account.

Because checking accounts are meant to be transactional accounts, your financial institution likely won’t penalize you for having “too many” withdrawals.

Keep an eye on your account balances to avoid overdraft transfers

Transfers made between accounts count toward your overall withdrawal limit. Make it a priority to regularly check your account balances for all of your deposit accounts. That way, you can be sure you won’t need to dip into your savings account in a pinch to cover an overdraft in your checking account.

Consider the financial products you’re using and whether they meet your needs

Savings accounts should be used to save for emergencies or long-term goals, not for your regular expenses.

If you find yourself constantly dipping into your savings account and hitting your withdrawal limit, it could mean that a savings account isn’t the right fit for all of your banking needs — perhaps you should focus on finding a different type of bank account like a checking account that offers more convenient transactions and won’t limit the number of withdrawals you’re allowed.

It could also mean that you need to revisit how much you’re putting away in your savings account and adjust that amount to have plenty of funds on hand to cover your expenses.

Ultimately, keeping your savings account withdrawals to a minimum is meant to encourage you to save, which will pay off in the long run and keep you on track to hit your goals. However, these limits can come back to haunt you if you’re leaning too heavily on your savings to make ends meet.

If that’s you, revisit your account agreement to determine what your limit is and whether or not that’s realistic for your personal finances. If it’s not, you might need to rethink how you’re covering your expenses each month and whether it’s time to consider a different type of account or budgeting strategy.