Questions and Answers

Is it possible to offset a charge card balance to a demand deposit account or loan?

Regulation Z (Truth in Lending) has a provision that prohibits the card issuer from offsetting the consumer's indebtedness from a credit card plan against funds held by the consumer on deposit with the card issuer.  See 12 CFR 226.12(d). This would seem to prohibit setting off a charge card balance against a demand deposit account.  (Under Regulation Z, a "charge card" is a credit card for which the finance charges not computed by using a periodic rate of interest.)

We are not quite sure what you mean by setting off the balance against a loan.  But if it is not setting off against "funds held by the consumer on deposit with the card issuer," it would not seem to be subject to the restriction described in the previous paragraph.

It might be wise for you to take a look at CFR 226.12(d) for guidance on what you are permitted to do even when offset is prohibited.

(Posted: 02/12/2008)

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