Why can't UK credit cards have a positive balance ?

ccquery2015

Hi all

I'm hoping you can explain this to me ... what is the rationale behind why UK credit cards are not allowed to have a positive balance ?

Overseas - if your normal credit limit is $5000 - and I transfer $10 000 into the account - my new available balance to spend is $15 000 ... overseas banks have no issue in you keeping a positive balance in a credit card account.

Why is this different in the UK ?

In the above example, how would you buy something with a credit card ( to get the loyalty points ) in the UK which is above your normal card limit ( besides putting it on your debit card ) ? Again, overseas you could just transfer the money into the credit card account prior to purchase - but not in the UK ?

Thanks

MEM62

The reason, I believe, is connected to money-laundering rules.

Basically, if you want to buy something that is more expensive than the available balance or limit on your card - you cannot.

chattychappy

Consumer credit and deposit taking are governed by separate regulatory regimes. It wouldn't be impossible, but given that people would rarely want to run positive balances I'm guessing the regulatory hassle means it's not viable.

forgotmyname

It can cause problems with your S75 protection also I presume?

If your in credit then your not borrowing money to pay for your goods
so it wont apply will it?

One of many issues than may crop up i guess.

If you need to spend more than your balance ask for a higher limit? Or spend on it then pay some off then you can spend on it again.

Biggles

I don't know if there is any reason why they can't; they choose not to, though it doesn't seem to be very often that they take you to task if you do overpay.

The old Egg card actually used to encourage you to keep a credit balance and paid a decent rate of interest if you did so.

I've had a (very small) credit balance on my Nationwide card for months and, as far as I'm concerned, it will stay there until next time I use it, which might be next time I go abroad.

fifeken

ccquery2015 wrote: »

In the above example, how would you buy something with a credit card ( to get the loyalty points ) in the UK which is above your normal card limit

Ask for an increase in your credit limit. This could be temporary or permanent.

Voyager2002

Quizzical_Squirrel wrote: »

I had a 49p credit on my Barclaycard Visa for many years.
They closed it down last month and kept my 49p!

How strange! I had a positive balance of 28 pence on my Capital One card. Eventually I closed it, and not only did they send me the money electronically but also they sent me a letter to say that they were doing so.

dzug1

ccquery2015 wrote: »

.. overseas banks have no issue in you keeping a positive balance in a credit card account.

Thanks

Really?? That may be true of your bank or your country but it's rather a sweeping generalisation to conclude it applies to every overseas country

planteria

i don't think accepting +balances is commonplace overseas.

Biggles wrote: »

The old Egg card actually used to encourage you to keep a credit balance and paid a decent rate of interest if you did so.

those were the days, i used to like that 4% Savings Account:cool: but i'm not sure even they 'encourage'd us.. it was fairly quiet, wasn't it?

and there's no way that even a small amount should have been taken away from you by Barclaycard. speak to them and get them to straighten it out.

MABLE

I remember back in 1980 having a positive of £60 on a Barclaycard I had.
BC told me then the card was not to be in credit so it is not a new ruling.

GingerBob_3

MEM62 wrote: »

The reason, I believe, is connected to money-laundering rules.

Basically, if you want to buy something that is more expensive than the available balance or limit on your card - you cannot.

Yes, given the paranoid world in which we live today, where mad money laundering rules get in the way of even basic transactions, this is probably the case. If you could have a positive balance you could use the card as a bank account, and we just can't be having that!