Can a Credit Card Company Take Money Out of My Checking?

Imagine the shock and panic of discovering that money is missing from your checking account. Upon further investigation, you discover that your credit card company withdrew funds from your account without your knowledge. While this may cause a whirlwind of events, such as messing up payments for other bills, it's important to understand that, in some circumstances, the credit card company can legally withdraw funds from your bank account.

Automated Payment

The most likely scenario is that you intended to discontinue the automated payment service and it slipped your mind. Automated payments are when you authorize the credit card company to withdraw a set amount from your checking account on a set day each month. This may be the minimum payment required or an amount that you feel you can afford over the minimum. In most cases, you sign up for this service through the credit card company's website. By checking the box and agreeing to the terms, you give the credit card company the right to withdraw funds from your account until you discontinue the service.

Garnishment

Another possibility is that the credit card company is garnishing your checking account for failure to make payments. However, this is only legally possible if the credit card company has a judgment against you. According to the Fair Debt Collection Practices Act, to obtain a judgment, the credit card company must first give you 30 days to resolve the unpaid balance. Once those 30 days pass with nothing resolved, the credit card company can file a lawsuit against you. The legal process in this regard varies from state to state and county to county. However, once the credit card company obtains a judgment, your may find a garnishment on your bank account.

Exemptions

A credit card company cannot garnish your bank account if the funds in that account are government benefits (such as Social Security), child support payments, alimony, disability or unemployment benefits, retirement benefits, workers' compensation, guaranteed student loan payments, life insurance benefits and/or proceeds from a personal injury claim. All of these are off limits. In addition, when a credit card company garnishes your bank account, it can only receive a percentage of your earned wages. This percentage limitation varies from state to state.

Considerations

A garnishment on your bank account can be a stressful process, so it's a good idea to avoid the possibility of it occurring. One way to do this is to attempt to make payment arrangements with the credit card company, even if the unpaid balance is already in the legal system. Above all else, utilize tools like online banking to be continuously aware of what is going on with your bank account, so that, if there is a garnishment, you know quickly and can avoid other problems like bounced checks.