Why Do credit Card Companies Allow You Go Over Your Limit?

LauranceB

Lets say you have a CC with 1k credit on it. Why does the card company allow you go over that limit by a substantial sum instead of not clamping down on the 1k that they gave you in the first place?

Has this happened to anyone else?

Ste.phen

If you go over the limit they make more money. Simple as that.

WIZE

Depends

Sometime it lets me go over by €100 and sometimes it wont let me go over at all. My credit limit is €1500

LauranceB

It's very annoying. Got my bill this morning and was 2k over limit. My own fault for not checking I suppose.

You think with people's jobs looking iffy the banks would be more cautious.

seamus

Most credit card companies don't allow you to go over your limit, but they will often increase your limit without consent. Are you sure your limit is 1k?

3DataModem

seamus wrote: »

they will often increase your limit without consent.

They can't do this any more AFAIK.

BuffyBot

3DataModem wrote: »

They can't do this any more AFAIK.

Correct, it's now on request only.

LauranceB

seamus wrote: »

Most credit card companies don't allow you to go over your limit, but they will often increase your limit without consent. Are you sure your limit is 1k?

Seamus, they haven't increased my limit just automatically allowed it to go way over it's limit.

Boffy, my wife has a Tesco CC and they automatically increased her card limit without her requesting it. I didn't know they weren't allowed do this.

seamus

LauranceB wrote: »

Seamus, they haven't increased my limit just automatically allowed it to go way over it's limit.

Boffy, my wife has a Tesco CC and they automatically increased her card limit without her requesting it. I didn't know they weren't allowed do this.

They don't seem to be allowed to do this anymore, but they were certainly doing it up to two years ago.

I would say that allowing people to go over their limit falls into this category too. Just ring them up and bollock them out of it.

monkeypants

Ste.phen wrote: »

If you go over the limit they make more money. Simple as that.

+1

Cash, interest and penalty charges for them.

egan007

Are you serious OP?

McDonalds will keep selling you burgers even though you are 'Full'

Jet Black

Simple solution: dont spend over your limit?
Banks will not always allow the transaction to go through it may depend on the transaction/retailer.

A rule was also brought in over two years ago to stop banks for increasing someones limit without their consent.

BuffyBot

Boffy, my wife has a Tesco CC and they automatically increased her card limit without her requesting it. I didn't know they weren't allowed do this.

They probably shouldn't if they were to comply with the spirit of the Irish law, but as Tesco Personal Finance is regulated out of the UK, they probably are allowed to do this technically. I believe, however, the UK are changing the law on this in the near future.

namloc1980

BuffyBot wrote: »

Correct, it's now on request only.

Yup an Irish regulated Bank/finance company can't increase your limits without you requesting it since the Consumer Protection Code came in a couple of years ago.

100gSoma

anyone got a silly high limit?

I started with 500euro on MBNA GOLD years ago. And within 6 months I think it was 1000euro automatically. Then over the following 5 or 6 years I increased it several times by myself by requesting on the website. How much do you want to increase it by? what is the reason? two questions, thats all. I said holiday, or new car etc.
anyway, I always paid off approx 10 times the minimum payment on my balance each month. at one I was paying off 1k a month. credit limit is now 10,500. I cannot remember how it got that high, but it did. I think once you pay off regularly they will up the limit for you upon request. Haven't used the card in 2 years so never bothered asking for it to be reduced. Some cards are no limit is that right? platinum?

Curly7

I'm over my limit now by about €500, i can only knock €200 off that this month and the rest next month, do things like this get reported on your credit report that may affect me down the line?

seamus

100gSoma wrote: »

I started with 500euro on MBNA GOLD years ago. And within 6 months I think it was 1000euro automatically. Then over the following 5 or 6 years I increased it several times by myself by requesting on the website. How much do you want to increase it by? what is the reason? two questions, thats all. I said holiday, or new car etc.

I think I started with a €350 euro limit. I was a student, so that was the max. I only wanted to buy stuff online anyway. As soon as I started working, it slowly incremented automatically, and usually when I was at or near my limit - no doubt giving me a "gift" of another €1k credit because I was such a good customer.

At €5.5k now I think. I only hit that if I'm planning on paying it off within a week or two (i.e. if I have the cash).

Some cards are no limit is that right? platinum?

Don't think it's platinum, but one of the providers issues a "black" card to VIPs (celebs and the like) which can theoretically be used to buy anything and which gets you stuff like free first-class flights and so forth. There is a minimum spend to get one (i.e. you have to actually spend like €50k/month or something using the card) and there are rumours that a private jet was purchased on one.

Businesses can also get "no-limit" accounts, but I think there's a limit on how much can be purchased in any single transaction.

I'm over my limit now by about €500, i can only knock €200 off that this month and the rest next month, do things like this get reported on your credit report that may affect me down the line?

Yes and no. The card company if asked may report how much is outstanding on the card, but unless you miss a payment it won't be a "black mark" on your credit history.

monkeypants

I had a corporate card in a previous job, years ago. They were handed out to loads of people at the time as we had a major project going on. Anyway, one daftie went off and bought himself a BMW straight away.

Toots

monkeypants wrote: »

I had a corporate card in a previous job, years ago. They were handed out to loads of people at the time as we had a major project going on. Anyway, one daftie went off and bought himself a BMW straight away.

Lol! I can imagine the reaction when the bill came in at the end of the month!

I have a platinum card and it's not limitless, however when I got it the limit was something like 10k, so I just phoned and told them to reduce it to 500 so I could clear it every month. OP if I were you I'd ring your credit card company and see what the story is here. I've gone over my limit by about a tenner once or twice, but 2000 is crazy, unless your limit is higher than you think, I can't understand how they allowed the transactions to go through. However, on the other hand, did you not think something was amiss when you had reached the 1000 mark and were able to keep spending?