IBA Compliance Connection

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One of our customers recently died, and the customer had an outstanding credit card balance and a deposit account with our institution. Can we place a hold on the account in the amount of the credit card balance? We have not obtained a security interest in the deposit account.

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No, you will not be able to place a hold on the deposit account. The Regulation Z prohibition on offsetting deposit account funds against consumer credit card debts — with certain exceptions that do not appear to apply in this situation — also applies to freezing or placing a hold on deposit account funds.

For resources related to our guidance, please see below:

  • Official Interpretations, 12 CFR 1026, Paragraph 12(d)(1), Comment 1 (“‘Freezing’ or placing a hold on funds in the cardholder's deposit account is the functional equivalent of an offset and would contravene the prohibition in § 1026.12(d)(1), unless done in the context of one of the exceptions specified in § 1026.12(d)(2). . . .”)