Before the Credit Card Act of 2009, it used to be common practice to allow consumers to go over their credit limit. This allowed banks to:
- Collect more interest on higher balances
- Charge fees for going over the limit
Typically, the over limit fee became active when your statement balance exceeded the credit limit after the statement cycle closes. If your payment posted before the statement cycle ended, the fee would not be charged.
As the link above states, the over limit feature is now opt-in to avoid having to pay an over-limit fee.
Ask for clarification on how the over-limit feature works with your specific credit card. Banks require opt-in, but they can still increase your credit limit temporary or permanently without charging you a fee. The Credit Card Act of 2009 does not cover every possible scenario, especially edge cases.
‘‘(k) OPT-IN REQUIRED FOR OVER-THE-LIMIT TRANSACTIONS IF FEES ARE
IMPOSED.— ‘‘(1) IN GENERAL.—In the case of any credit card account
under an open end consumer credit plan under which an over the-limit
fee may be imposed by the creditor for any extension of credit in
excess of the amount of credit authorized to be extended under such
account, no such fee shall be charged, unless the consumer has
expressly elected to permit the creditor, with respect to such
account, to complete transactions involving the extension of credit
under such account in excess of the amount of credit authorized.