What happens if you exceed the limit?

[HiLine]

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? 

[j_casteel]

I think in the terms you get with the card it states over the limit fee's if any.

[jsickz32]

Ive been charged over limit fee on my back then bofa student plat. My card was near maxed and got charged interest and that put me over the limit. However i once tried to charge something that would of put me over the limit and the card was denied. All this was back in 09 when i was 18.

[bs6054]

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@HiLine wrote:

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? 

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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?

[Anonymous]

With Capital One, you can ask if you want the lender to approve a charge that exceeds your limit, mostly to prevent embarrassment at the checkout counter if the card is denied. I opted in for this but never intend on using it. The lender advises that if they do approve an over the limit charge, that $X fee will be charged to the consumer.

[Anonymous]

You can not be charged a over limit fee, unless you opt in.   This is part of 2009 credit card act.

In general, they can accept or deny the charge regardless of whether you opt in.  So, IMO, opting in makes no sense.   

http://www.creditcards.com/credit-card-news/credit-card-law-interactive-1282.php

[chnceit]

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@Anonymous wrote:

You can not be charged a over limit fee, unless you opt in.   This is part of 2009 credit card act.

In general, they can accept or deny the charge regardless of whether you opt in.  So, IMO, opting in makes no sense.   

http://www.creditcards.com/credit-card-news/credit-card-law-interactive-1282.php

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+1

Also if you do opt in and your statment cuts your CR will show that you went over your limit and IMO lenders dont like this.

[bs6054]

Thanks, that seems pretty clear then!

Have people here been asked about opting in?  I see on the Cap One site you can, can't find it on some other sites and I don't remember any communication on my cards (I just got one today and it didn't ask, whereas a bank account I opened a few weeks ago did.)

[kekrre]

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@jsickz32 wrote:
Ive been charged over limit fee on my back then bofa student plat. My card was near maxed and got charged interest and that put me over the limit. However i once tried to charge something that would of put me over the limit and the card was denied. All this was back in 09 when i was 18.

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A few years ago (I'm not sure when), BoA got rid of all over limit fees (at least, I'm pretty sure I received a mailing to that effect). I know because I floated myself about $100 over my limit during a rough patch. My experience was (similar to a flex spend card, I think) if I was under my limit, any charge would be approved, even if that charge brought me above (e.g. buying $50 of gas with $5 in available credit). My high balance was reported accurately, as exceeding my CL. Presumably, this wouldn't matter (as much, if at all?) if the "account type" was "flexible spending credit card" rather than "revolving credit card".

But BoA has always been very nice to me for some reason. My rate is prime + 3.99% (so 7.24% right now) on my BoA 1-2-3 Cash Rewards card (current offer seems to be 12.99%), Cash Advance/BT APR is reasonably low (14.24% - compare to 9.9% (!) on my USAA MC). They never reported me for being late during same said rough patch, although I was, and comped me a $19.99 SafePass card. I also have a couple of 0% APR cash advances, 0% APR BTs, and 1.99% APR versions of the same extending about 18 months from now (about 6 months left on the 0% offers, 1 year of the 1.99% rates thereafter).