Bucks Blog: Keeping an Eye on Savings Account Transfers

Back in January, I fulfilled a New Year’s resolution by setting up automatic online transfers for my children’s weekly allowances. So far, so good — or, so I thought.

Last week, I got a stern e-mail from Capital One 360 (formerly ING Direct), warning me that I was making too many withdrawals from my savings account. If I didn’t stop, they’d have to close the account, “since this isn’t your first offense,” the e-mail said. I could practically see the finger wagging.

What, I wondered, had I done wrong? I vaguely recalled another e-mail from the bank last month, but I didn’t open it. I don’t ever “withdraw” money from my account. Since I had previously set up a monthly transfer from my outside checking account into my Capital One account (actually, ING Direct, when I’d first done it), I’d simply set up automatic transfers of $5 a week from my savings account to the girls’ subaccounts, for their allowances.

The problem, according to the helpful representative I spoke to on the phone, is that federal rules (Regulation D, to be precise) permit just six withdrawals a month for savings accounts. Transfers out — even to “subaccounts” within the bank, like those I had created for my girls’ allowances — count as withdrawals. And I was doing eight a month.

So to solve the problem, I’d have to reduce the number of transfers — say, to twice a month for each girl — or have the weekly $5 deposits made directly from my outside checking account. (There’s no limits on funds coming in, just going out.) Or, I could open a new Capital One 360 checking account, which doesn’t limit withdrawals.

I chose the second option. The point of the online transfers is for my children to watch the balance grow week by week, and I fear I’d lose an incentive to discuss their money with them regularly if I reduced the frequency of deposits. As it is, I sometimes forget to show them their balances anyway.

The representative canceled the existing transfers for me, and then I went online and set up the new, weekly transfers from my outside account.

The switch was a minor inconvenience, and actually reminded me to be more active in discussing finances with the girls, so in the end it all worked out fine. At least, I think it did. We’ll see.

Have you encountered any glitches when setting up online accounts for your children’s allowances? Or have you had any problems in setting up transfers to or from a savings account for yourself?

Article source: http://bucks.blogs.nytimes.com/2013/04/02/keeping-an-eye-on-savings-account-transfers/?partner=rss&emc=rss