Common use of Setoff and Security Interest Clause in Contracts

Setoff and Security Interest. If your Account has a negative balance for fifteen (15) days or more, we have the right under the law to use the money from another account you have with us at the Bank to pay the debt (this right is known as the right of “setoff”). In addition, you grant us a security interest in your Account so that the balance in the Account is collateral for any current or future obligation you owe us (whether as a borrower, a guarantor, a debtor or otherwise). We may use the money to pay the debt even if withdrawal results in an interest penalty or insufficient funds to cover outstanding items. The security interest granted by this Agreement is consensual and is in addition to our right of setoff. However, the right of setoff and security interest may not apply to your other account with us if: (1) it is an IRA or a tax-deferred ▇▇▇▇▇ Retirement Account (but this does not affect our rights under any consensual security interest); (2) the debt is created by a consumer credit transaction under a credit card plan; or (3) our records demonstrate to our satisfaction that your right of withdrawal arises only in a representative capacity (for example, only as an authorized signer, attorney-in-fact, or a fiduciary).