Savings account as primary bank account?

[manlymatt83]

Curious if anyone is taking advantage of the fact that the Fed has indefinitely suspended Regulation D (which limited savings accounts to 6 ACH debits per month) and it's now optional whether banks enforce that or not. Some banks are choosing not to enforce it anymore, which leaves the question... can you just use a savings account as your primary "bank" account?

Take this reddit post from Brian Barnes, who owns B2 bank in Minnesota:

“The regulators dropped the rule that used to limit Savings accounts to 6 electronic transfers per month. That opens up the possibility to use a Savings account as your primary transaction account. We'll continue to make improvements, including incorporating more transfer rules.”

And…

The Fed has said they have no intention of reinstating it (https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm).

"The Committee’s choice of a monetary policy framework is not a short-term choice. The Board does not have plans to re-impose transfer limits but may make adjustments to the definition of savings accounts in response to comments received on the Board’s interim final rule and, in the future, if conditions warrant."

So, they reserve right to make changes but if that were to happen, we would adapt as required.

In an AMA, I asked for further clarification. They confirmed it’s their business model at this point:

Neither M1 nor B2 Bank, NA, Member FDIC have any policy to limit transfers into or out of the HYSA or close accounts due to frequent transfers. We are not just okay with the use of the HYSA as a primary transaction account, that's our long-term vision for the product!

More banks are taking the same steps. For example, Discover Bank has “temporarily” suspended the 6 transaction limit… going on 3 years now:

“… we are currently not enforcing the monthly transaction limit on the number of certain types of withdrawals and transfers out of savings and money market accounts. Starting April 24, 2020, you can assume that if you exceed six limited transactions in a month, your account won’t be at risk of closure due to excessive limited transfers out of your account. You may receive warnings in the mail or above your transaction details if you near or exceed 6 limited transactions, but this won’t impact your account. Please keep in mind, there is no set timeframe on if/when we will start enforcing the transaction limit again. However, we will let you know if/when we do so.”

Regulation D isn’t coming back. It’s possible to attach ATM cards to Savings accounts. Third party services now allow you to use QR codes at ATMs to withdraw cash:

American Express Savings also no longer has a transaction limit. More and more (online) banks are implementing this and the lines will continue to blur. Expect the landscape to look a lot different two years from now.

I realize there are checking-like accounts out there -- Wealthfront Cash account, Vanguard Cash Plus, Fidelity CMA -- but I tend to like the interfaces and simplicity of "it just works" of banks. Anyone else using a savings account as their primary money in / money out account? I hear Sofi works as well.

 

[Tech Junky]

I use a lot of CU accounts for their perks of lower APRs on CCs and each one requires a "savings" share to be a "member". The Reg D thing doesn't really phase me since I can't remember any CU pushing this limit. All traditional banks though on the other hand did. Banks are trash when it comes to APYs on your cash anyway and not worth the hassle of dealing with them in the first place.

CUs offer so much more if you pick the right ones.
CU shared branching offers the ability to do traditional transactions nationwide even with a single branch CU - https://www.coop.org/Shared-Branch-ATM
https://www.kasasa.com/ - 5%+ on Checking w/ minimal requirements - 10-15 swipes / DD / etc
Low APR on CC's - my lowest right now is 6.9% and it's a fixed rate. I have another that was 9.9% for many years until they forced a change to 11.9%, one other is a fixed 9.5%
-- tradeoff of these low APR's is the CL you can use with them tends to be more conservative than a traditional bank. Where my highest CU CC CL is 30K my traditional bank highest is 65K

If you're into rewards from CC's a CU will open the door to funding from a CC to a virtually unlimited amount and it's put through as a purchase on the bank side. If you get a new CC that has a 5K requirement to make $500 in rewards then you just open a new CU account using the CC to fund it putting X in checking and Y in savings to hit the 5K requirement. Now, the thing to consider is whether you want to keep the CU account or not for other products which usually requires keeping it open for 180 days to avoid penalties for early closure.

ATM's are the PITA of any setup. If you use a POS cash over at a grocery store it's free up to $100 typically but, since you usually get rewards for swipes on the CU account it's better to avoid cash. If you don't swipe often then using Amazon reloads works well for hitting that requirement to hit say 15 x $5 to get your APY and make more in rewards off your CCs instead of wasting spend on the debit card.

Banks are so old school like a checkbook.

 

[manlymatt83]

I use a lot of CU accounts for their perks of lower APRs on CCs and each one requires a "savings" share to be a "member". The Reg D thing doesn't really phase me since I can't remember any CU pushing this limit. All traditional banks though on the other hand did. Banks are trash when it comes to APYs on your cash anyway and not worth the hassle of dealing with them in the first place.

For the purpose of what I was pointing out, M1 is 5% APY on savings and Discover is 4.2%. Wealthfront is up to 5.05%. The fact that Regulation D has been suspended can unlock these high APY accounts as "primary" transaction accounts.

CUs offer so much more if you pick the right ones.
CU shared branching offers the ability to do traditional transactions nationwide even with a single branch CU - https://www.coop.org/Shared-Branch-ATM
https://www.kasasa.com/ - 5%+ on Checking w/ minimal requirements - 10-15 swipes / DD / etc

Agree Kasasa checking is awesome. I looked into it, but really didn't want to deal with the debit swipes. I use a CC for everything.

Low APR on CC's - my lowest right now is 6.9% and it's a fixed rate. I have another that was 9.9% for many years until they forced a change to 11.9%, one other is a fixed 9.5%
-- tradeoff of these low APR's is the CL you can use with them tends to be more conservative than a traditional bank. Where my highest CU CC CL is 30K my traditional bank highest is 65K

I never pay interest on CCs so not a worry for me personally.

If you're into rewards from CC's a CU will open the door to funding from a CC to a virtually unlimited amount and it's put through as a purchase on the bank side. If you get a new CC that has a 5K requirement to make $500 in rewards then you just open a new CU account using the CC to fund it putting X in checking and Y in savings to hit the 5K requirement. Now, the thing to consider is whether you want to keep the CU account or not for other products which usually requires keeping it open for 180 days to avoid penalties for early closure.

ATM's are the PITA of any setup. If you use a POS cash over at a grocery store it's free up to $100 typically but, since you usually get rewards for swipes on the CU account it's better to avoid cash. If you don't swipe often then using Amazon reloads works well for hitting that requirement to hit say 15 x $5 to get your APY and make more in rewards off your CCs instead of wasting spend on the debit card.

Banks are so old school like a checkbook.

Touché

 

[Tech Junky]

Seems Like we're on the same page then when it comes to swipes and rewards. The reg d isn't an issue with high apy cu uses though. The problem is that cus don't advertise a whole lot and people are clueless when it comes to financial stuff.

One issue that can come up with cus is the cap on the deposit that earns the highs apy. Some are really low at 1/5k some venture as high as 25k or higher but are more strict on membership requirements. That's when you want those high apy savings accounts.

Unlocking reg d though doesn't really make a difference if people are using debit cards for pos transactions as they don't work on savings accounts and bill pay in most scenarios requires checking.

 

[manlymatt83]

Seems Like we're on the same page then when it comes to swipes and rewards. The reg d isn't an issue with high apy cu uses though. The problem is that cus don't advertise a whole lot and people are clueless when it comes to financial stuff.

Do you know of a credit union that offers a high APY on their "primary" account? I don't. If there's a credit union out there that offers 4%+ APY on an account I can use for all my transactions, I'm sold.

Unlocking reg d though doesn't really make a difference if people are using debit cards for pos transactions as they don't work on savings accounts and bill pay in most scenarios requires checking.

I don't use checks or a debit card, and can't remember the last time I got cash out of an ATM. That's why I'm leaning towards using a Regulation D suspended savings account... 5% on all of my money in / money out.

 

[brianmanahan]

i've never tried it, but i figure i've got so little in my checking account that it doesn't matter if it's only making %0.05. everything else is in HYSA or i bonds or investments.

 

[Tech Junky]

Finding high savings APY is a bit more of a chore if that's what you're referring to for "primary" but, kasasa accounts are offering 5%+.

To hit those goals to get the APY just use Amazon refills.

Looks like Aliant / PenFED are hitting 3% on savings. https://www.bankrate.com/banking/best-credit-union-savings-account-rates/
Both are easy to get into as well.

https://smartasset.com/checking-account/best-credit-unions DCU is offering 6%+

The issue might be the balance cap though as DCU is $1K / PenFED doesn't seem to have the cap.

If you want the max return you might end up with accounts at multiple FI's to achieve the goodness. Most offer ACH transfers within a day or less. Zelle is good for moving under $5K/mo. With the shared branching though for CU's just go into a branch and grab a certified check if you really need the speed to deposit at a "bank".

 

[Brainonska511]

I have a checking account with the same bank I have a HYSA with at 4.15%. It's not a big deal or a big loss if I move some from checking to savings, then a week later move it back to pay a bill.

Plus, neither account has any weird rules about needing to use debit swipes or direct deposit or account minimums to avoid fees.

 

[manlymatt83]

I have a checking account with the same bank I have a HYSA with at 4.15%. It's not a big deal or a big loss if I move some from checking to savings, then a week later move it back to pay a bill.

Plus, neither account has any weird rules about needing to use debit swipes or direct deposit or account minimums to avoid fees.

This sounds like Discover. I've recently opened an account with them. I like them so far.

 

[Brainonska511]

This sounds like Discover. I've recently opened an account with them. I like them so far.

I actually use Capital One. It's been a satisfactory experience over the past few years - just have to check every once in a while that they don't introduce a new savings product with a better rate. Plus, they have full service ATMs (no branches) in my area, so that's come in handy when I've had to deposit a really large check or two over the past few years.

I have used Discover savings, if only to get the account opening bonus.

 

[dullard]

Since many banks also lifted the 6 withdrawal limit on money market accounts, that is another option. Many have access to debit cards. Many are paying well over 4%, some over 5% right now. Unless you need ultra ultra safe investments, money markets just seem better for your needs (theoretically money markets have a chance to lose money even if it basically never happens).

That said, I really don't see the advantage of having everything in one account. I like a small checking account with account numbers flying across the internet and a large money market account with a number that only I and my bank know. Why expose all your cash every single company you've ever used a check or debit card with in the history of that account?