Regulatory Information

Temporary Unlimited Coverage for Noninterest-bearing Transaction Accounts
Notice of Changes in Temporary FDIC Insurance Coverage for Transaction Accounts
FDIC Extends Expiration Date for Increased Insurance Coverage
Limits on Transfers from Savings Accounts Increased
What Happened to the Paper Check?
Check 21 Act
FACT Act
Related Links

Temporary Unlimited Coverage for Noninterest-bearing Transaction Accounts

A noninterest-bearing transaction account is a deposit account where:

* interest is neither accrued nor paid;
* depositors are permitted to make an unlimited number of transfers and withdrawals; and
* the bank does not reserve the right to require advance notice of an intended withdrawal.

A noninterest-bearing transaction account also includes all deposits placed in an Interest on Lawyers Trust Account (IOLTA) or its equivalent.

Note: Money Market Deposit Accounts (MMDAs) and Negotiable Order of Withdrawal (NOW) accounts are not eligible for this temporary unlimited insurance coverage, regardless of the interest rate, even if no interest is paid.

For more information see FDIC Frequently Asked Questions on the Dodd-Frank Act at www.fdic.gov/deposit/deposits.

Notice of Changes in Temporary Insurance Coverage for Transaction Accounts

The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, money-market deposit accounts, and Interest on Lawyers Trust Accounts ("IOLTAs").

For more information about temporary FDIC insurance coverage of transaction accounts, visit www.fdic.gov.

FDIC Extends Expiration Date for Increased Insurance Coverage

Limits on Transfers from Savings Accounts Increased

* Six Transaction Limit: This limit applies to transfers to third parties or to other deposit accounts at the same bank made by preauthorized means (such as an ACH auto debit), automatic means (such as a savings overdraft protection product), telephone, electronic or other data transmission (such as through an online banking product).

* Three Transaction Limit: This limit, which is a subset of the overall six transaction limit, applies to checks, drafts, point of sale, debit card or similar orders payable to third parties.

During the calendar month the “savings account” would be limited to an overall total of 6 transactions as listed in either of the above Six or Three Transaction Limit categories; however, only 3 of those 6 were permitted to be transactions as those listed under the Three Transaction Limit.

The revision to Reg D removes the Three Transaction Limit effective July 2, 2009 and the transactions that were previously limited to the Three Transaction Limit category now become part of the Six Transaction Limit category as follows:

* Six Transaction Limit (effective 7/2/09): This limit applies to transfers to third parties or to other deposit accounts at the same bank made by preauthorized means (such as an ACH auto debit), automatic means (such as a savings overdraft protection product), telephone, electronic or other data transmission (such as through an online banking product), checks, drafts, point of sale, debit card or similar orders payable to third parties.

What Happened to the Paper Check?

Check 21 Act

In October 2003, the Check Clearing for the 21st Century Act became law. Now known simply as Check 21, the legislation's goals include “to improve the overall efficiency of the nation's payments system.”

Today, most checks must be physically transported—whether across town or across the country—before they can be cleared. This is expensive and time-consuming.

Check 21 provides a new option: legal acceptance of paper reproductions of original checks.

This reproduction is called a “substitute check” and is produced from a digital image of the original check.

How Will Check 21 Affect You?

By Oct. 28, 2004, every bank will be required to accept substitute checks, just as they currently accept your original paper checks. If you receive your canceled checks or electronic images of your canceled checks with your account statement, you will begin seeing substitute checks after that date. A substitute check is the legal equivalent of the original check and will include all the information contained on the original.

Check 21 includes several safeguards for check writing consumers. Check 21 helps speed check clearing, so check fraud can be discovered faster. Faster fraud detection means faster resolution for customers. Another safeguard: A bank that creates a substitute check must warrant that it is accurate. The bank also has to make sure that the substitute check is produced in accordance with industry standards for quality.

A Word About Check Conversion

You may already have experienced two other emerging payment practices, and each is an example of “check conversion,” which uses the automated clearinghouse, or ACH, system.

In the first example, a retailer converts a paper check into an electronic ACH payment on the spot. In this situation, if you've written a check for a purchase, you are handed the check back immediately after it's converted into an electronic ACH payment at the store or shop.

In the second example, regular billers (telephone, utilities and credit card providers, for example) convert your check payments into ACH payments. The check has been “converted” to an electronic format, and you won't receive a copy of the original. The payment will be reflected in your bank statement, which becomes the legally accepted proof of your payment.

Keep in mind that both of these example transactions are different from substitute checks.

All of these changes allow for faster payment processing and even better service to the nation's banking customers.

Efficient Check Clearing Benefits You

The improvements brought about through Check 21 allow for faster payment processing and even better service to you, the bankingcustomer. A few of the benefits include:

• Faster check clearing
• Decreased fraud
• Less paper
• Increased security

FACT Act-Free Credit Reports

The FACT Act amends the Fair Credit Reporting Act and has three major objectives:

• Enhance the ability of consumers to combat identity theft
• Increase the accuracy of consumer reports
• Allow consumers to exercise greater control regarding the type and amount of marketing solicitations they receive

The free annual credit reports will be phased in across the country from west to east over a nine-month period. Consumers in eastern states, which include Pennsylvania , can order their reports beginning 9/01/2005.

FTC Facts for Consumers (more detailed FACT Act information)

Related Links

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