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You can lose your credit card for any reason, real or imagined or for no reason at all. That's because it isn't "your" card, it's their card.
Some CCC's don't like you overpaying by very much and they don't like you gaming their imposed credit limit by overpaying to make a larger purchase. Some couldn't care less.
Most CCC's will not approve a purchase larger than your CL, even if you have a credit balance. Your CL is not in relationship to your balance, except as "available credit" which is not associated with a credit balance.
If you have a $500 credit and a $1000 CL, usually you can only charge up to $1000. The credit would then post against your charges and you would then have a $500 charge balance. But the credit will not add to CL or give you the ability to get an approval on a purchase greater than $1000.
And if you significantly overpay your balance, this can flag your account with "unusual" activity, which ccc's don't like unusual.
@Anonymous wrote:If you have a $500 credit and a $1000 CL, usually you can only charge up to $1000. The credit would then post against your charges and you would then have a $500 charge balance. But the credit will not add to CL or give you the ability to get an approval on a purchase greater than $1000.
I agree. I tried doing that with my BoA Visa last year which had a $700 CL and paid $700 thinking that I could buy the iMac I wanted for about $1,400 but BoA declined the charge since it was more than $700.
Truth be told, CCCs never like a credit balance. They want you to owe them, not the reverse. However I can't imagine them actually closing on you unless, like everyone else is saying, you try using the credit balance to buy more than your CL will allow.
Making them owe you some money will annoy them, but trying to game the system and increase your CL could definitely bring down some AA.