Gasp.

Any consumer who would accept this pitch and have the ability to go over the limit shouldn't own a credit card. In fact, they should be beat with the fiscal responsibility baseball bat.

I'd rather grovel to family members, HELL, even strangers before go over the limit on my cards due to an emergency, even worse- due to a woot-off!

We are all sheep...

@Verucalise(countingcalories): (of course, to clarify, I do understand that the company can allow you to go over the limit, but they cannot charge you after that date. But the way they describe it in their pitch says otherwise)

Capital One is indeed being misleading, but so is the author of the article above.

Card companies have two choices under the CARD act for how to deal with overlimit charges: (1) decline the charges; (2) allow them to go through without charging a fee.

Either choice is legitimate. Indeed, card companies may even choose customer-by-customer or even charge-by-charge whether to let overlimit charges go through.

Capital One has apparently opted for declining the charges. The way they presented that information to the customer was indeed a bit misleading, but the ultimate effect was legitimate and in accord with the law -- "You have to opt in if you want us to allow overlimit charges to go through with a fee rather than being declined."

Consumerist could have, and should have, done a better job of making that clear. I find the snarky outrage to be just a bit misplaced.

@Verucalise(countingcalories): What would you do if you lost a BOC because your card was declined?

@Verucalise(countingcalories): I don't really understand why you think it's so evil for someone to knowingly go over their credit limit.

If I need a lot of money quickly in an emergency, and putting it on my card is the fastest and easiest way to get it, and I know when doing so that I'm going over my credit limit and I'm going to be charged an overlimit fee, then it seems perfectly reasonable for me to have that choice.

Going over one's limit is not ipso facto proof of financial irresponsibility.

What the CARD Acts makes impossible is for people to *unknowingly* go over their credit limits and get charged a fee without realizing it. With that regulation in place, people can make informed decisions about whether to exceed their limit.

If you're hitting your credit limit, you should probably stop spending money you don't have.

The one time I needed to get more money on a card during a busy month, I just paid off some of the balance mid month... and of course paid off the entire balance at the end of the month.

@jik: It's only evil when people with an obsessive-compulsive buying problem do this.

@GitEmSteveDave_ Natural H1N1 Cure: I'd cry and bury my face in some random package of nabisco products.

Way I hear it jik is right on this.

@PHRoG: If we are ALL sheep, then what's the problem?

@dognose: If you can't pay in cash, then stop spending money you don't have.

@jik: I find the snarky outrage to be spot on. Banks are financial institutions with responsibilities to investors, shareholders and account holders. This is a blog with consumer news and cat pics. One has more reponsibility to be completley upfront and honest than the other.

@dognose: Wow, why didn't poor people think of that? It must be nice to make your own money at home.

Whats with Capital One and the scorpion theme? Did I miss an earlier joke somewhere?

@dognose: Good for you?

What does that have to do with Capital One complying with the CARD Act, though?

@jik: What bank in their right mind would choose option 2? It doesn't benefit the bank at all. Essentially if the bank allows a charge to go through without a fee, they are saying that your "credit limit" is just a suggestion instead of a hard limit. So why have a limit at all, if they are going to let everything go through?
I can't see any bank actually letting these charges go through.

If only prosecutors could get suspected criminals to waive their rights, their jobs would be much easier.

But seriously, waiving my rights is only worth $10?

They must think the American public is stupid and I pray that they're not correct.

@techstar25: Maybe one that wants to provide additional perks to its customers. "Hey, you've never been late with a payment before and this is the first time you've tried to go over your credit limit, so as a courtesy, we're going to extend your limit a small amount this one time. Tell your friends how we're so much nicer than the other banks that want to charge you a $30 fee."

@jik: It is not evil, it is stupid. Maybe not stupid in the instance you need it, but stupid by being that close to your limit in the first place. Mostly I see credit limits way higher than they should be. You shouldn't be anywhere close to them. I will grant is that they have been reducing them lately.

Yes, having the choice can be seen as good, they are kind of making it a false choice though. They don't need to stop you for going over, they just can't charge you. They could allow you to over over a few times by a certain percentage and not charge you.

One thing to realize is the credit limits are there for a reason. They do not want to lend you over a certain amount. If the limits are reasonable to what you can handle(a big if I know) then you should yourself not be anywhere near the limit.

@Blueskylaw: You're not waiving any rights. Capital One is complying with the CARD Act by making you opt in before charging you any over-the-limit fees. The Consumerist headline was/is misleading.

Assuming that the OP's recounting of the story is accurate, Capital One's phrasing is misleading too. You're not really getting a $10 discount. Their fee is just going to be $10 less than it was before. Now it will be either $29 if you opt in or $0 if you don't. (And they won't allow you to go over your credit limit if you don't opt in.)

@jik: Well said, jik.

I kept getting calls from Capital One so yesterday I answered. The man on the phone told me about this 'new act' going into effect in February of 2010 much in the same way the author of this post has described. When I told him that I didn't want the ability to charge beyond my credit card limit period he was incredulous.

He again tried to sell me the overdraft plan and I again requested that I not be allowed to overdraft my credit, period. The Capital One guy said to me that if I don't agree to this new policy I might not have enough money in case of a medical or car-related emergency etc because I won't be able to charge more than my credit limit. The thing is I ALMOST always pay my balance off in full each month--so a lack of credit is not an issue for me in case of an emergency.

I did not appreciate being talked down to like a child, but Capital One won't be getting any overdraft fees from me!

may I have the snake oil burger and the backstabbing pie for dessert. thank you

@frank64: I know what you're saying, but I think you're conceiving of a lower-priced emergency. You don't have to carry a balance to have an ER bill (for person or, for that matter, for animal) run higher than your limit.

@techstar25: Of *course* it benefits the bank to let you go over your credit limit.

In addition to the goodwill generated by doing so as noted by ben, it also means that the charge goes through, which means that they get to charge a processing fee to the merchant.

In addition, if you're the kind of customer who carries a balance, the higher your balance, the more interest they make from you.

In fact, the only reason for the bank to reject overlimit charges is if they think you might not be able to pay off your balance, and as I noted above, they can make that determination on a per-customer or per-charge basis.

I have a Visa Signature card from Chase which has no preset credit limit (the Chase Web site claims that it does, but that's only because they haven't actually made any improvements to the Web site since long before the Visa Signature program was created). Rather, the credit limit has been replaced by a revolving balance limit, i.e., if I go over the limit in any billing period, then my minimum payment is large enough to bring me back below the limit.

@dognose: Hitting your credit limit has nothing to do with spending money you don't have.

@floraposte: Stop suggesting people should even toy with the idea of paying medical bills with credit cards.

Another reason that you might temporarily go over your credit limit is a screw-up by the merchant or bank, which puts charges on your card that you did not make.

I recently tried to pay for a lunch with a client and was told my card was declined. Luckily I had a backup card, but this was embarassing, particularly as I had carefully checked the card and knew that I had ample balance on the card.

Turns out that a purchase I had made several days before had subsequently been run through THREE TIMES by the processing company. It was an error and they eventually fixed it, but if I had been allowed to put the lunch charge through I would have gone over my credit limit - thanks to a stupid mistake by somebody else.

@techstar25: I can see some logic if the charge is a dollar or two over. Letting it through might be a better option. If it was a $100 over limit that might be another issue.

They are being very misleading about the terms put in place by the CARD act and not fully disclosing the situation they are asking the cardholder to agree to.

The truth is they are asking people to opt in to a fee for an action they already might take on their behalf and not charge a fee. So a fee for nothing it what it is.

I am sure we will see more of this as banks try to find creative ways around the law.

@floraposte: I hear you on that. With most ER visits of any significant magnitude running hundreds of dollars, if I had to go to the ER back in the first year of college, I would have had a very low ceiling to work with. It doesn't take a lot to tip you over the balance.

@MostlyHarmless: They're poisonous and prone to hide in your shoes?

@Blueskylaw: I big enough portion of the public is stupid. That is why companies and banks keep doing these things. They wouldn't if it didn't work enough of the time to be profitable for them.

Just look at the food industry and the shrink ray. That works because enough people don't notice or just shrug and buy it anyway.

@harvey_birdman: too much wool.

@frenchic: But did the rep at least say "Thank you come again!" ???

All your base are belong to us

[upload.wikimedia.org]

"So you're not giving up all your rights, you're opting in to overlimit fees"

Yeah, that's what I said the first time you posted this...

@floraposte: I bet that doesn't happen that much as compared to people just over using and not planning. You should never pay your ER bill with a credit card!

I know I will get beaten up for this: You should not go over your limit on a CC for a pet. Your are putting your family in economic peril. The vet bill on animals is as crazy as our medical bills. I know of a few people in severe economic distress because they did this and their pet ended up dying anyway, and with more suffering to boot. In another case, one of my friends vet was using emotional blackmail to push a very costly treatment which research later showed him was probably not going to work.

@harvey_birdman: It is more important for poor. Interest cost money and diminishes your standard of living. Most poor don't have cards, so the poor argument/class warfare doesn't hold up in reality.

Most people going over their limits are middle class or at least people with OK jobs who decide that the nights out or the trip can be paid for later.

@Cant_stop_the_rock:
Obviously Capital One is choosing to stop allowing transactions that go over the limit in addition to being forced to stop imposing the fees. Opting in to the fee is the only way they'll allow overlimit purchases. I'm not sure why you would opt in to that, but the idea of running your credit card up to the limit is also foreign to me. To each his own.

@frenchic: I am betting they would not allow a large charge over the limit anyway. I don't know, but I bet when they allow an over the limit to go through it is a small amount only.

If they thought you could handle a bigger balance then they would have let you, and if they feel you can't the fee isn't going to be worth it to them. They really aren't selling anything of value.

@mythago: That fee would have been taken down. But would be an instance where they would have accepted the card if you opted in.

@frank64: One more time... Going over your credit limit is not the same as "putting your family in economic peril."

We had to install an entirely new heating system (new ducts to replace the ones with degraded asbestos, plus new furnace) in our house last month. The total cost of the new system was around $12,500. We put it on our credit card because (a) it was convenient, (b) we get 1% cash back, (c) doing so gave us a good long float on the $12,500, and (d) the installers didn't offer a discount for paying by cash or check. It put us well over our credit limit. I'll be paying it off completely when the bill comes. Our family is not in any economic peril.

What puts you in economic peril is spending more than you have, not spending over your credit limit. Going over your credit limit is not definitionally a bad thing; relying on your credit limit to prevent you from spending more than you have *is* definitionally a bad thing.

@jik: If you're in a situation where your credit needs change drastically month to month, you can look into getting a non-preset spending limit card. They have a limit to the credit line, but when your bill comes in you can pay off whatever you've spent above the credit line without a penalty. They're great for small businesses.

Ironically, Capital One called me last night regarding this. They tried to get me to verify my zip code to ensure that it was me (okay, wierd...). Before I provided any information, I asked what the call was in reference to. The gentleman was very polite and said it was related to the new CARD Legislature and its impacts to my account.

I simply told him I did not have time to discuss (have my hands full with a newborn) and would call later.

I am glad I read the first post about this yesterday...because I feel I was well-informed! :)

@secret_curse: Yeah, cards without a preset spending limit are pretty convenient for people who know how to spend responsibly. That must be why I wrote about them here almost an hour ago.

@jik: I agree. The same thing is going to happen with banks and debit cards. Except that when they start clearing checks in the middle of the day, and someone doesn't check their balance before going to lunch....oh boy.

@GitEmSteveDave_ Natural H1N1 Cure: BOC?
Can't find anything that might be suitable here...
[en.wikipedia.org]

Except Bump of Chicken, I suppose.

@PHRoG:
Why am I reminded of Life of Brian?