I agree that Credit Unions have this right. I disagree that regular banks do. There are special rules pertaining to Federal Credit Unions that are in the authorizing statute that are not contianed in the federal laws allowing national banks.

See Citizens Bank of Maryland v. Strumpf, 516 U.S. 16 (1995). Set off is a right under state law that is not restricted to credit unions but resides in all similarly situated banks.

Borrowers need to be particularly careful about the cross-collateralization provisions in credit union loan documents because it frequently means that if the borrower has a car loan and a credit card loan they will BOTH be secured by the car.

Thanks for the info on Citizens v Strumpf. I was generalizing from NC law wherein Banks do not have the right of set off, but CU's do. I agree that cross collateralization provisions can make your car and your depository accounts security for credit card debt to a credit union.