Re: What happens if you exceed the limit?
12-29-2012 11:46 AM
I have several questions:
1. If you go over the limit on a credit card and maintain the excess through the statement cut date, is the over-the-limit balance reported to the CRA's, assuming the card is not a Visa Signature?
2. Do creditors charge you for exceeding the limit? I think I read somewhere that if a creditor approves a payment that pushes the balance over the limit, the creditor has to either notify the card user of any penalty fee before approving or not charge a penalty fee at all. Is this correct?
3. What types of cards do not allow users to exceed the limit?
4. Are there other meaningful questions I couldn't think of?
I'm pretty sure on 1) that the CRAs will report the current balance and the CL as usual, the FICO scores will presumably be impacted because of the very high utilization on that card.
2) As said below, some (most) do, probably of the order of $25-$40, this is listed in your terms and conditions.
More generally, are you thinking more of checking accounts/debit? These are more tightly regulated now. The consumer has the option of choosing to allow the bank to approve a transaction that exceeds the available balance (and get charged an overdraft fee + interest) or telling the bank that all such transactions must be declined, avoiding fees from the bank (but of course possibly getting charged by the entity the payment was intended for).
I'm not aware of the requirement you state for credit cards, which doesn't mean there isn't one. Part of the CARD act?