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#1969194 - 10/14/14 04:32 PM Consumer Line of Credit tied to Checking Acct
swiggles Offline
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swiggles
Joined: Aug 2001
Posts: 7,351
We offer a consumer open-end line of credit as an alternative to exposure to over-drafts and the associated fees. If the account is overdrawn, the system pulls, automatically, from the line. The line isn't JUST for overdrafts, however. It can be used for anything. Is it OK that we require the customer to have a checking account at our bank, tied to the line? There is no other way to access the line other than through the associated checking account as there is no plastic and no specical checks connected to the line.
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Lending Compliance
#1969198 - 10/14/14 04:37 PM Re: Consumer Line of Credit tied to Checking Acct swiggles
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
We offer a consumer open-end line of credit as an alternative to exposure to over-drafts and the associated fees . . . . The line isn't JUST for overdrafts, however. It can be used for anything. . . . There is no other way to access the line other than through the associated checking account as there is no plastic and no specical checks connected to the line.

So are you saying if I have $5,000 in my DDA and I have a $5,000 LOC tied to that DDA I can write a check for $2,500 and have it access the LOC instead of my DDA?

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#1969216 - 10/14/14 05:01 PM Re: Consumer Line of Credit tied to Checking Acct Dan Persfull
swiggles Offline
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swiggles
Joined: Aug 2001
Posts: 7,351
Actually...I was wrong....there are 4 methods of access.

  • Special checks to access the line..(not provided unless customer requests)
  • Request a withdrawal in person
  • Request a withdrawal by phone
  • The balance in the the connected checking account falls below the triggering balance of zero


So can we require the customer to have and maintain the checking account (4th bullet point) in order to obtain this loan product? The product has to be underwritten again every two years for renewal.
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#1969234 - 10/14/14 05:53 PM Re: Consumer Line of Credit tied to Checking Acct swiggles
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Unless there is something in TX law prohibiting it you would be able to require the DDA that the line is tied to to be with your bank.
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The opinions expressed are mine and they are not to be taken as legal advice.

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