The Credit Card Overlimit Fee

phatraptor

After ten years of using credit cards, I've just been introduced to the overlimit fee.

My first reaction to this was WTF? The account has a limit, the credit card issuer lets the account go over this limit, just so they can charge an overlimit fee!

After reading up on various discussions of this, some people have tried to spin overlimit fees as saving the customer embarrassment. However, who is going to save the customer embarrassment when the real overlimit limit is reached? Why is the customer never notified of the two limits?

Other people for whatever reason, suggest that as it is written in T&C's, you signed up to it, therefore the banks can do whatever they want... Well, I have a big problem with T&C's when they legitimise immoral behaviour or contract in unfair or one sided rules.

I haven't seen any reasoning that supports any argument other than this "standard practice" only exists to scam customers out of their money.

Who regulates this stuff, is it the central bank?

another question

I have had experience of this before and it is rather annoying. Apparently as it was explained to me before it can be applied in the following instances:

If your limit is say €1000 and you have €1000 worth of purchases made so the balance is a €1000 and you go into a shop to buy something for €20 then it will and should be declined at the till point but where this changes is if you have made a payment to the bank on the balance and the bank 'sees it' but hasn't yet 'applied it' then the €20 euro transaction goes through and hence puts you over the limit at the point of sale.

Another thing I experienced was when interest was added to the max limit, that also puts you over the limit, as do late payment fees etc...

I had one particular case where I made a payment on a card at the post office on a Friday and the due date was the Saturday, the payment wasn't appied to my card by the post office/bank until the following Wednesday, I incurred interest and a late payment fee AFTER the payment I made had cleared, it was ridiculous.

Basically, from what I understand the allow the card to go over the limit for charges/interest/fees etc like the Government Stamp Duty, things that we don't physically buy (as they would be declined) and also if you get your dates mixed up.

I have learn't from experience and even if I plan on paying more than the minimum payment when I get paid etc I always pay the minimum anyway well before the due date to avoid all of the above.

another question

They really are out to catch you in every way possible....I had a card that I paid off the balance in full and had the account closed, I got a print off confirmation that the account was closed. 6 months later and I got a letter from a collection agency in the post relating to said card!...with a balance exceeding €100. I was in total shock, I was looking at the charges and they were all interest and late payment fees. I instantly rang the VISA helpdesk and explained that I had paid the balance in full and had confirmation that the account was closed, they said NO! they account had only been closed 3 months ago not 6! and that the Government Stamp Duty had been applied again and that I hadn't paid it or any of the minimum payments. It was unbelieveable, I wasn't getting bills or anything, the card wasn't even listed on my internet banking. I argued and argued with them and they only agreed to halving the balance.

phatraptor

Interesting information another question.

If interest being applied to the account puts it over the limit, fine, an overlimit fee is not so hard to digest in this case.

However, the transaction that put me over the limit was an online payment, it was not interest added. The transaction should have been declined IMO.

Your experience with closing the account is a tricky one. It all depends how hard you are willing to fight them over it, also don't forget that the people they have on the phones are doing this day in day out, they will have enough experience to push a lot of people over and get them to pay up no matter how unfair the terms are.

another question

Oh tell me about it....of course I was one of those who keeled over and said OK ILL PAY! I was so frustrated with it all, especially after I took out a loan to pay off the card in the first place, I was also paying extra on the loan repayments to clear it faster and then I got landed with that collections letter....and like you said they are dealing with it everyday over the phone and its the generic responses that are soo infruiating, you just feel you are getting nowhere with them.

mickoneill30

phatraptor wrote: »

Why is the customer never notified of the two limits?

Does your statement not show your limit? I've two credit cards with two banks and on both of them up in the top right it shows the total credit limit.

Random

mickoneill30 wrote: »

Does your statement not show your limit? I've two credit cards with two banks and on both of them up in the top right it shows the total credit limit.

think youve missed the point here
hes saying the card company are not limiting him to his limit and are letting him go over the limit and then charging him for the priviledge.

pjmn

... another perspective....

if bank had declined the payment, this thread would probably be about what terrible treatment having been a credit card customer for 10 years etc etc..

... ultimately the bank/credit card company didn't put the account over it's agreed limit, the OP did, who should take responsibility for his/her actions...

... either keep card within limit, seek increased limit if appropriate or operate a debit card only...

{rant over}

Terrontress

These fees work on the concept of people taking it on the chin and not complaining.

Phone them and ask them to refund the fees. Your limit cannot be adjusted upwards by the bank due to Irish legislation - not your fault, you shouldn't pay.

If they won't refund then ask them to justify the fee amount in writing. they will cave in and pay out.

phatraptor

pjmn wrote: »

... another perspective....

if bank had declined the payment, this thread would probably be about what terrible treatment having been a credit card customer for 10 years etc etc..

... ultimately the bank/credit card company didn't put the account over it's agreed limit, the OP did, who should take responsibility for his/her actions...

... either keep card within limit, seek increased limit if appropriate or operate a debit card only...

{rant over}

pjmn, I'm surprised your the first person to "take the banks side" for want of a better phrase, I've seen other threads with more posts from this perspective.

I would have to disagree with the reasoning though, if I was with one credit provider for ten years, I wouldn't expect them to increase my overlimit fee to whatever magic number they see fit, I would expect them to increase my limit, the one I know about.

There is no reason for an overlimit fee, other than to scam a fee from the customer. They can block transactions that go over the overlimit, therefore they can block transactions that go over the limit.

When I got this card, I expected it to be declined once there is no more credit, this is expected behaviour, this is the agreed credit limit I talked about with the representative.

If I got declined because I would go past the agreed limit, I wouldn't be complaining, how could I complain about not being able to take more credit than the limit signed up to and discussed?

On the other hand, if the credit issuer allowed me to go over the limit a little and didn't charge me for it, I would be singing their praises to anyone that would listen.

another question

Yes I totally disagree with @ pjmn if customers were to take responsibility for there own actions then whats the point of applying a limit in the first place...the limit is placed there for a bank to charge fees and make extra money simple as...if you have reached the limit set by the bank then no purchase should be processed thereafter...they do what suits themselves...as they always do

Xavi6

another question wrote: »

Yes I totally disagree with @ pjmn if customers were to take responsibility for there own actions then whats the point of applying a limit in the first place...the limit is placed there for a bank to charge fees and make extra money simple as...if you have reached the limit set by the bank then no purchase should be processed thereafter...they do what suits themselves...as they always do

Nice bit of bank bashing but you're wrong.

Limits are there for a reason - to deter customers from spending beyond their means. Why do you think there's an application process which involves the declaration of salary, outgoings etc? It's to assess the maximum you could afford to owe without being a risk to both yourself and the bank.

If there were no limits then there would be more irresponsible spending, and Ireland of all places can do without that right now.

As for over the limit fees themselves, you can argue that they're morally wrong and whatever else but there's only so much hand holding that can be done. Manage your account properly and you'll never have to worry about it.

mickoneill30

Random wrote: »

think youve missed the point here
hes saying the card company are not limiting him to his limit and are letting him go over the limit and then charging him for the priviledge.

So the point is he's notified of his limit and then isn't able to monitor his own spending to make sure he stays under it. Got it.
It's not really that hard to keep track of your spending though is it?

I can't see technically how a limit can be enforced. The handheld swipe things are still valid. If somebody used that to go over his limit and there was a hard limit then an unscrupulous user could just keep on buying products using those. If there was a hard limit the owner of the card wouldn't be liable and the retailer would have to pay for the products.

I suppose the manual swipes are still valid for the times the electronic systems have issues. I had it recently. I was in a restaurant with no cash. Their electronic cc thing wasn't working so the guy swiped it using the manual system. If I was over my limit there is no way the retailer could have known that with the system down.

phatraptor

Xavi6 wrote: »

Nice bit of bank bashing but you're wrong.

Limits are there for a reason - to deter customers from spending beyond their means. Why do you think there's an application process which involves the declaration of salary, outgoings etc? It's to assess the maximum you could afford to owe without being a risk to both yourself and the bank.

If there were no limits then there would be more irresponsible spending, and Ireland of all places can do without that right now.

As for over the limit fees themselves, you can argue that they're morally wrong and whatever else but there's only so much hand holding that can be done. Manage your account properly and you'll never have to worry about it.

I think this is slightly off topic, no one is arguing the merits of having limits, the discussion is on how multiple limits have been invented to create an environment where a credit provider is more likely to extract the most money out of the customer.

In theory, limits are there to curb irresponsible spending, but in Ireland that turned into something more accurately described as irresponsible lending, and now I'm going off topic.

I do think it's important that business behaves morally, just because it is possible to avoid something you (maybe not you Xavi6?, but some people) might consider unethical, is that really a reason to allow it to continue?

mickoneill30 wrote: »

So the point is he's notified of his limit and then isn't able to monitor his own spending to make sure he stays under it. Got it.
It's not really that hard to keep track of your spending though is it?

I can't see technically how a limit can be enforced. The handheld swipe things are still valid. If somebody used that to go over his limit and there was a hard limit then an unscrupulous user could just keep on buying products using those. If there was a hard limit the owner of the card wouldn't be liable and the retailer would have to pay for the products.

I suppose the manual swipes are still valid for the times the electronic systems have issues. I had it recently. I was in a restaurant with no cash. Their electronic cc thing wasn't working so the guy swiped it using the manual system. If I was over my limit there is no way the retailer could have known that with the system down.

I agree, if using a terminal that does not have an online link to the credit provider, we cannot reasonably expect the transaction to be denied if the offline transaction brings someone over their limit. I also agree that if your interest brings you over the limit, then an overlimit fee is a reasonable deterrent. I do not see why online transactions cannot be blocked for going over the agreed limit.

I was glad to see that at least one country is taking a stance against the overlimit fee, America, surprisingly enough. Basically, consumers have to opt-in to the overlimit (and the fee) if they want it. I wonder how it works with offline transactions...
http://www.americanbanker.com/issues/174_152/law_hits_home_as_cards_opt_out_of_overlimit_fees-1000795-1.html

BuffyBot

A limit is a limit. But for practical reasons, it can always be exceeded. A) not every transaction is authorised "live". Many merchants have floor limits, which purchases below that are processed.

There is also the possibility of having to fall back on non-electronic processing (the old clunk-clunk machines) which means a transaction may come in and set an account over its limit because it couldn't be checked online.

It is the customers responsibility to look at their limits and ensure they keep under it.