avoiding bank charges redux

July 20, 2005 2:12 PM

I went over the credit limit on my credit card and got whacked with a $35 fine --- again. Are there any cards that, instead of approving your over-the-limit transaction and then fining you for it, will instead decline transactions that are over your credit limit?
posted by goethean to work & money (15 comments total)

Why would they want to do that? Revenue from fees is a tremendous percentage of their profit these days.

Don't hesitate to call them up and grump - the average phone bozo has some latitute to refund a limited number of fees a year. After that, put the card in a sock drawer and start paying cash or using debit cards. Even aside from those idiot fees you're paying a huge premium in exchange for making those purchases now rather than after saving up for them, possibly as much as 25% more after compounding interest.

If you're close to your limit you need to be VERY careful about the universal default clause most cards have now. They can bump your rate not just because you're late to them but if lates show up on you credit report to any OTHER creditor. There's no federal limit on charge card rates any more and most states also have none (like VA) or are as high as 24.99-29.99%. If you're not keeping yourself notably below the limit now imagine how much harder it'll be when you add $1 to your bill for every $3 on there now.

If you want to play hardball on the phone with them and tell them to cancel your card if they won't lax the fees, make sure you tell them you want them to refuse all new charges, something you might have to do in writing depending on their policies. Many will cancel your account but accept new charges. How in a million years this could be considered "cancelled" is left as an exercise to the reader - I can't grok it.
posted by phearlez at 2:26 PM on July 20, 2005

some cards will decline. you should also be able to ask them to do that for you in the future. i've only been declined twice, and it was right after making a couple huge purchases where they basically secured double the amount of money they needed and released it later. another time i was actually at my limit and they declined the transaction. give your CC company hell.

that's what should have happened, and if somehow the transaction did go through, it could be the fault of the merchant or the bank. one time i had closed an account but forgot about it, and kept carrying the card. a couple months later, i got a bill with some hefty late fees. i called them and asked what was up, since i cancelled it. they said a transaction was forced onto the card after the acct was closed and they wanted me to pay. long story short, i ended up not paying, and the CC company was pretty pissed at the merchant for forcing the transaction.

call customer service and don't stop yelling 'til you get to a top-level manager, and spill the entire scenario. technically, you're liable, but you can probably get around it if you fight hard enough, and pressure them to do an auto-decline on your account.

also, check out this site for more details.

-quad
posted by quadrinary at 2:36 PM on July 20, 2005

goethean didn't say that he doesn't pay off his credit card in full every month. I've come close to maxing a $2,500 card in one month after a few big purchases (airline tickets, etc), it's not a hard thing to do.

But to more directly answer your question; the best place to look for such a thing would be your local credit union.
posted by darkness at 2:37 PM on July 20, 2005

phearlez- thanks for the heads-up about the no-new-charges thing. good to know, and probably could have saved me a couple months of frustration... while my credit score is damn good, my interest rates on the 3 CCs i do have are still ridiculously high. good thing i don't keep a balance on them.
posted by quadrinary at 2:39 PM on July 20, 2005

darkness - true, I was just playing the odds and if the bet if if someone in our society has CC debt or not, the smart wager is that they do.

Quad, if you have a good score there's no reason you shouldn't have good rates. Over at Art of Credit you can find discussion about how to best game your score and discussion of good rates and strategies, over at Who Gave Me Credit you can find people reporting on their success and failure with various applications in conjunction with their FICO scores.
posted by phearlez at 2:55 PM on July 20, 2005

thanks again phearlez. i currently have a credit score of 725, which i is pretty damn good. it's as good or better than my dad's and he's one of the more financially responsible folks i know. given that kind of score, it's pretty ridiculous that i have a 20% APR on one of my CCs. i'll check those links further, and probably start threatening cancellation. thanks a bunch.
posted by quadrinary at 3:08 PM on July 20, 2005

I would just call and tell them to make sure the limit is enforced. In fact, I've never heard of what you're describing. I have all the major CCs and they all can be declined if reaching the limit.
posted by dobbs at 3:37 PM on July 20, 2005

The credit card companies sometimes will not decline if the purchase takes you just a bit over your limit (say 5%) if you're a customer in good standing. It is easy money for them and it spares you the inconvenience and embarrassment of getting declined over a few bucks.
posted by birdherder at 3:43 PM on July 20, 2005

Not a direct answer to your question, but can you ask your credit card company to raise your limit? Every time I have asked Discover to raise mine they have happily done so - I pay my balance every month, but it is nice to have some latitude for school books, plane tickets, Christmastime, etc. You say this has happened several times - you clearly regularly reach a certain level, so why not see if your card will boost you up? If they won't do it then maybe you should be shopping for a different card anyway, regardless of the annoying fees.
posted by gatorae at 4:09 PM on July 20, 2005

another reason for not being declined is that you may have other charges that are new during the month but have not "posted" to the account, so they allow this new one to go over...

725 is a good scorew (beat my 768 as a 21 year old) the top rate i pay is 9.9 and thats the lowest USAA credit card services goes... (well it 2.9 on the index) i recentlly got a 0 apr for one year then 7.9 from Bank of America
not to shabby...

Cheers
posted by crewshell at 6:17 PM on July 20, 2005

765? pretty good. i'm pretty sure i'd be higher, but i cosigned for two credit cards with my dad for business/home remodeling stuff. strangely, it shows up on my credit reports, and the debt carried on them i think rubs off on my score. any thoughts on that?
posted by quadrinary at 11:34 PM on July 20, 2005

Not necessarily an answer to your question, but I have heard that making a phone call to your credit card company, and merely apologizing for going over your limit and saying you will be more careful in the future will get you out of paying a fine. Worth a try.

And I have a regular US Bank Visa, and my card is always declined if I'd otherwise exceed the limit. So I would think it's a fairly common feature you wouldn't have a problem finding in another credit card.
posted by apple scruff at 6:46 AM on July 21, 2005

The United Plus Mileage Visa has no Over-the-Credit-Limit fee. It does have a $60 annual fee. I think other Visa Signature cards similarly have no over-the-credit limit fee.

If you pay off balances every month, consider an American Express charge card. It (in theory) has no upper limit. In practice, they will decline charges if their computer tells them you are unlikely to pay.
posted by profwhat at 7:01 AM on July 21, 2005

Find a credit union and see about getting a credit card through them. My credit union Mastercard has no annual fees, a very low interest rate (less that 10%) and is managed by the credit union. Once I forgot to pay my monthly bill, and a few days after it was due the CU called to remind me it was do- no late fees or mark on my credit record.
posted by gus at 11:21 AM on July 21, 2005

I set up an automatic loan checking account (not the same as a regular checking account). It covers overdrafts in my checking account and makes an automatic transfer if I exceed my credit card limit. (Of course, the accounts must be with a single bank and be linked.)

The interest rate is stiff, but I avoid penalties and black marks on my credit record.
posted by KRS at 11:32 AM on July 21, 2005