HELOC ATM Access

Does allowing a customer to transfer money from a heloc using the atm make the heloc a credit card? If not what if we allow them to withdraw an advance from the atm?

(15)(i) Credit card means any card, plate, or other single credit device that may be used from time to time to obtain credit. The term credit card includes a hybrid prepaid-credit card as defined in § 1026.61.

(ii) Credit card account under an open-end (not home-secured) consumer credit plan means any open-end credit account that is accessed by a credit card, except:

(A) A home-equity plan subject to the requirements of § 1026.40 that is accessed by a credit card;


I also assume this ATM card is tied to a deposit account and only access to the HELOC occurs at the ATM - right?

Correct the only access would be at the ATM.

Since it cannot be used for purchases would it be excluded under the following?
C. An account number that accesses a credit account, unless the account number can access an open-end line of credit to purchase goods or services or as provided in § 1026.61 with respect to a hybrid prepaid-credit card. For example, if a creditor provides a consumer with an open-end line of credit that can be accessed by an account number in order to transfer funds into another account (such as an asset account with the same creditor), the account number is not a credit card for purposes of § 1026.2(a)(15)(i). However, if the account number can also access the line of credit to purchase goods or services (such as an account number that can be used to purchase goods or services on the Internet), the account number is a credit card for purposes of § 1026.2(a)(15)(i), regardless of whether the creditor treats such transactions as purchases, cash advances, or some other type of transaction. Furthermore, if the line of credit can also be accessed by a card (such as a debit card), that card is a credit card for purposes of § 1026.2(a)(15)(i).

No - it would be excluded under the citation I provided earlier.

I know it is not covered under 15(ii) but what excludes it form 15(i)?

It has to meet both i and ii

Comment 4. Credit card account under an open-end (not home-secured) consumer credit plan.

i. An open-end consumer credit account is a credit card account under an open-end (not home-secured) consumer credit plan for purposes of § 1026.2(a)(15)(ii) if:

A. The account is accessed by a credit card, as defined in § 1026.2(a)(15)(i); and

B. The account is not excluded under § 1026.2(a)(15)(ii)(A) through (C).

Ok I thought 15(i), 15(ii), 15(iii), and 15(iv) were separate definitions.

Sorry start a old tread back up but is there any scenario where a HELOC can be considered a credit card?

I guess my main question is there any situation where 1026.12—Special credit card provisions would apply to a debit card due to having access to a HELOC?

No - but all of 1026.13 would apply. Having a "debit card" tied directly to a HELOC is still sort of an oxymoron. Unless the rules have changed, that would violate the card issuer rules.

The access would be limited to the ATM where they would be able to transfer funds from their HELOC to their DDA.

Then it would not be a credit card and just a HELOC access device as an ATM card only.

Would it be just an access device if accessed a unsecured consumer LOC at the ATM?

An ATM only card would be like an account number:

C. An account number that accesses a credit account, unless the account number can access an open-end line of credit to purchase goods or services or as provided in § 1026.61 with respect to a hybrid prepaid-credit card. For example, if a creditor provides a consumer with an open-end line of credit that can be accessed by an account number in order to transfer funds into another account (such as an asset account with the same creditor), the account number is not a credit card for purposes of § 1026.2(a)(15)(i). However, if the account number can also access the line of credit to purchase goods or services (such as an account number that can be used to purchase goods or services on the Internet), the account number is a credit card for purposes of § 1026.2(a)(15)(i), regardless of whether the creditor treats such transactions as purchases, cash advances, or some other type of transaction. Furthermore, if the line of credit can also be accessed by a card (such as a debit card), that card is a credit card for purposes of § 1026.2(a)(15)(i).

Reviving an old thread.....my bank wants to provide a "card" that can be used to advance on a HELOC. After reading this thread and various citings in Reg Z, it seems less cumbersome to consider the card an access device that is only used at the ATM.

However, I have a feeling they will want the card to have the ability to purchase goods and services, making it a "credit card" (1026.2(a)(15), which we are trying to avoid. If we attach the card (filter it though) a deposit account, would this change it's definition and disputes would then be governed by Regulation E?

It is most likely going to violate your card issuer agreement. A debit card is required to be tied to a consumer asset account and not a liability account. Unless they can also make other deposits and withdrawals from this checking account, just a shadow account used for processing purposes, is not going to work. We found this out at one bank the hard way probably 30 years ago.