### Question
How does the law define transaction account?


### Answer
Under *12 U.S.C. § 461*, **transaction account** is defined as:

> a deposit or account on which the depositor or account holder is permitted to make withdrawals by negotiable or transferable instrument, payment orders of withdrawal, telephone transfers, or other similar items for the purpose of making payments or transfers to third persons or others

#### Citation:
  - *12 U.S.C. § 461*
  - Heading: **CHAPTER 3-FEDERAL RESERVE SYSTEM > SUBCHAPTER XIV-BANK RESERVES**

