Offsetting Two Separate Accounts

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Question:

Does a bank have the right of offset between two checking accounts or a checking and a savings account? I know a bank can debit a checking or savings account to cover a loan payment, however, I am not sure what the rules are between two deposit accounts.

Answer:

It's often helpful to have a provision in the bank's deposit contract that allows offsetting negative balances against positive balances when there is commonality of account ownership. When there's no contractual provision, and even when there is, state law may affect a bank's right to grab the funds.

First published on BankersOnline.com 3/24/08