226.12(d)(1) prohibits a bank from using an offset of deposit accounts before or after termination of card privileges. However, (d)(3) does not prohibit a plan from “periodically” deducting all or part of the debt from a deposit account if the customer agrees to the plan in writing, subject to the restrictions in (d)(1). Someone has informed me that if our bank has an automatic payment plan, we can offset a deposit account.

Question: Even if we set up a card plan with automatic deductions, we would still be subject to the prohibition of offset in (d)(1), right?

That is my understanding, yes.

I agree. If you notice section (d)(3) says you are still subject to the restrictions of (d)(1).

Having an automatic payment plan is not the same as having a security interest in the deposit account.

Thank you for your assistance! It is a good day when both Andy and Dan agree with my opinion.

FWIW, I agree, too. The offset prohibition deals with unforeseen events that are not required by the contract, whereas, the EFTs are required.