Banking Interpretations

NYSBL 108(5)
Personal Property Law 413
GRBB Part 80

March 23, 2005 
From Sharon Cherry

Dear [ ]:

This is in response to your e-mail addressed to Barbara Kent regarding bank credit or debit card access to a home equity line of credit. You asked if this is still prohibited by New York Law as indicated in a March 19, 1991 letter by Kathleen Scott, Associate Attorney.

Yes, the March 19, 1991 opinion letter regarding "Bank Credit Card Access to Home Equity Line" issued by Kathleen Scott is still applicable.

Section 80.10 of the General Regulations of the Banking Board applies to home equity lines of credit but it does not address the manner in which a borrower may obtain advances on a revolving credit account.

Section 413.12(a) of New York's Personal Property Law, which relates to retail installment credit obligations, specifically provides that a credit card used for purchases cannot be secured by personal or real property. While the issuance of a "debit" card is not specifically prohibited, if the debit card actually functions as a credit card, as it appears would be the case in your example, that would also be prohibited.

Your e-mail does not offer specifics as to how the "plastic card" that you refer to will function. If there are additional facts that you believe would cause a different conclusion in your situation, you may wish to set forth your fact situation and analysis in more detail.

Please note that we are not addressing the issue of whether federal law and regulations preempt Section 413.12(a) of New York's Personal Property Law and/or Section 108(5) of the New York Banking Law.


Sharon Cherry 
Associate Attorney