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Can we Issue Debit Cards on Savings?

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Question: 
Can we issue debit cards to savings account holders? The account will not be a transactional account. We would only allow pinned transactions on these cards.
Answer: 

There isn't a black and white answer to your question. You certainly can issue a debit card that accesses a savings account, but should you? If you only want to allow PIN-based transactions, and the customer only uses the card at ATMs, you've basically issued an ATM card, rather than a debit card.

If your customer takes such a card to a merchant that accepts PIN-based debit card transactions, the networks may reject the purchase because it points to a savings-type account. If the transaction is allowed, it will count as one of the three third-party transactions by check or debit card that your customer is allowed under Regulation D. That will present compliance monitoring challenges for the bank.

Once you have discussed these concerns with management of your bank, the idea of issuing savings account debit cards may die on the vine.

[Editors Note:As of 7/2/09, the separate limit of three per month for checks, POS debit card transactions, etc., has been eliminated, and those transactions are now only subject to the 6/month limit that applies to other restricted transfers and withdrawals.]

First published on BankersOnline.com 7/31/06

First published on 07/31/2006

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