Your credit card company may have access to your bank account balance information, and it could seize your available funds to cover bills you owe. However, most card companies don't have automatic access to your account. To understand what cards and card companies have access to your balance and when, read your credit or debit card's cardholder agreement and your bank's privacy statement.
Debit Cards and Bank Accounts
Debit cards look like credit cards. They may even bear credit card logos, such as Visa or MasterCard, but they don't work the same way. Unlike credit cards, which keep track of your purchases and provide you with an invoice at the end of your billing cycle, debit cards withdraw money from your bank account each time you swipe them or enter their numbers into an online shopping portal. If you authorize a debit card purchase, you authorize the bank to access your bank account balance and provide some of the funds to the merchant.
Secured Credit Cards
A secured credit card works like a traditional credit card -- you use it to make purchases, the company invoices you each month, you pay the invoice and the card company reports your activity to the major credit bureaus. However, the balance of your secured card is tied to a deposit you've made into a savings account at the same bank that owns the credit card. If you don't pay your secured credit card for several months, the card company can access your savings account balance and use your deposit to cover your debt.
Balances Seized for Unpaid Bills
If you don't make payments on your credit card, the card company can take money from your bank account, but only if it's won a lawsuit against you. To take money out of your account, a card company must get a judgment against you, an official statement that the court agrees you owe the debt. Armed with the judgment, the card company can tell your bank to hand over your balance by presenting a levying order. The bank must hold your money for 21 days, but at the end of the holding period, your creditor gets it.
Information Sharing and the Gramm-Leach-Bliley Act
Your bank might be giving out information about what's in your account, as well as your contact information and details about your other assets, but the law lets you put a stop to who gets most of that information. According to the Federal Deposit Insurance Corporation, some banks sell your personal information to other businesses, like credit card companies. If you want your bank to stop, you need to read your bank's privacy notice, which it's required to provide. The notice will detail what type of information your bank shares and how to stop it from sharing your information. However, the Gramm-Leach-Bliley Act, which gives you the right to opt out, doesn't require your bank to stop giving out all your information. For example, you can't stop a bank from sharing public information or information needed to conduct business.
- Federal Deposit Insurance Corporation: Your Rights to Financial Privacy
- Consumer Action: 2011 Fall issue -- Secured Credit Card Survey
- Consumer Financial Protection Bureau: What is a Judgement
- Bankrate: Creditors can Garnish Your Bank Accounts
- Washington State Department of Financial Institutions: Debit Card Frequently Asked Questions
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