Is It a Bad Idea To Get a Credit Card Where You Bank?

No matter where you do your banking, the bank or credit union you use likely has a credit card product.

And they’re probably marketing it to you pretty heavily via email, statement mailings and in-branch advertisements.

You may be wondering: "Is it actually a good idea to get a credit card where I bank?"

That internal dialogue probably has you weighing the pros and cons of being able to pay your credit card bill in the same online portal where you bank versus your bank knowing every last thing about your spending habits.

I decided to enlist the help of money expert Clark Howard to answer this question. In this article, we'll walk through what he said, including a warning he gave to consumers who opt to take a credit card from their bank.

Clark Says It’s OK To Do This, But There’s One Big Warning

Clark says there's nothing inherently bad about using a credit card issued by the same institution that handles your personal banking. This is especially true if they're offering you great rewards program for either cash back or travel points .

In fact, it could be a great opportunity to stretch your dollar. Some institutions offer benefits like lower APR rates or higher cash back rates on their credit card if you are at a certain tier of banking with them.

"If you have a checking account with a particular bank and they offer you a really good deal on a credit card, there's nothing wrong with taking that credit card deal," Clark says.

For example, the Alliant Cashback Visa® Signature Credit Card offers an enhanced 2.5% cash back to members who keep a certain amount of money in their checking account .

Typically, Clark would classify a "good deal" as getting at least 2% cash back on your everyday purchases with no annual fee attached. Bonus points if the card also comes with a lucrative welcome offer , too!

So, if you're able to get a card that checks those boxes from the same bank or credit union that handles your checking or savings account: That's great.

However, Clark did say there is one issue he wanted me to warn you about.

Clark’s Warning: Watch Out for the Cross-Default Clause

While Clark does “green light” the concept of getting a great deal on a credit card from your primary banking institution, he wants you to be aware of the potential downfalls.

Particularly, he wants you to be aware of their ability to take money from one of your accounts and apply it to your credit card bill, whether you want them to do that or not.

“The one warning you need to know is what’s known as the cross-default clause,” Clark says.

A cross-default clause is a common provision in a financial agreement that allows a loan issuer to pull money from one account to cover funds that are delinquent in another. You likely agreed to something like this in the terms of service that you accepted with the bank when opening your account.

While being delinquent on your credit card debt may seem like a low-probability event for you, Clark says it may not require that level of mishap to find yourself being squeezed by this.

He walked me through an example that could happen to any of us:

“Let’s say I have a checking account with a particular bank and I have a credit card with that same bank,” Clark said. “And, let’s say I have a dispute with the bank about a charge on the credit card and I don’t want to pay it.

“The bank reserves the right in their terms of service for you that they can seize money from other deposit accounts you have to settle that. So, although you have the same chargeback rights [as you would with any credit card issuer], if things are contentious, you could still have the bank take your rights away by seizing your money.”

Do you have a credit card issued by your primary bank or credit union? We’d love to hear about your experience in the Clark.com community .

This article was originally published on Clark.com

The post Is It a Bad Idea To Get a Credit Card Where You Bank? appeared first on Clark Howard .