Question: Can a bank provide an access device for a home equity line of credit (HELOC)?
Answer: This is permissible, with several risk considerations for the bank. Under Regulation Z, § 1026.2(a)(15)(ii), a debit card that can access a HELOC is a credit card. Additionally, § 1026.12(d)(1), further prohibits the bank from exercising the right of setoff for credit card balances. Therefore, whereas a HELOC without a credit card generally provides a right of setoff, subject to certain requirements, the bank loses this right when providing a debit card to access a HELOC.
Regulation Z, § 1026.2(a)(15) – https://www.consumerfinance.gov/rules-policy/regulations/1026/2/#a-15-ii
Regulation Z, § 1026.12(d) – https://www.consumerfinance.gov/rules-policy/regulations/1026/12/#d
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