Credit card charges

chattychappy

AllieKat wrote: »

Over limit charges are a joke, to be honest.

I'd go further - they are probably unenforceable at their present level. Penalties mustn't exceed a reasonable estimate of the cost to the injured party. £12 became a defacto standard after an investigation by the OFT some years ago, though they were at pains to say it shouldn't be. Penalties aren't meant to be profit centres.

That said, most CCs refund on request for a first "offence", and on that basis, I don't think people can complain.

PeacefulWaters

Jazzmag wrote: »

Thanks all. Just seems a bit rough.

Have you considered reducing your your balance to avoid this happening again?

Avoiding future fees is completely under your control.

AllieKat

ValiantSon wrote: »

How would that be fair? I have no interest in defending the card company, but if you exceed your credit limit then you have breached the terms of the contract, so it is not unreasonable that a penalty be imposed. The individual has responsibility for managing their finances.

How is it *not* fair to have a contract with more consumer-friendly terms? I said nothing about breaching contract terms. I said we need products like the incredibly-popular-in-America (and offered in quite a few countries) Visa Signature.

Visa Signature cards have what is referred to as a 'flexible spending limit' - it doesn't mean the bank has to approve it, but it's allowed and within the terms to go over your limit - but if you do, you have to pay off the over-limit amount in full that month. In this way, it's a bit like a hybrid between a credit card and a charge card - there's no pre-set hard limit, and you can spend whatever you like without penalty (if the transaction is approved). There's just a limit on borrowing.

It varies by market (as far as I know, no Visa Signature cards are offered here) and issuing bank, but in the US banks generally offer them for rewards credit cards with limits exceeding 5000 USD.

Mastercard World Elite cards also often offer this, again, I don't know of any in the UK.

ValiantSon

AllieKat wrote: »

How is it *not* fair to have a contract with more consumer-friendly terms? I said nothing about breaching contract terms. I said we need products like the incredibly-popular-in-America (and offered in quite a few countries) Visa Signature.

Visa Signature cards have what is referred to as a 'flexible spending limit' - it doesn't mean the bank has to approve it, but it's allowed and within the terms to go over your limit - but if you do, you have to pay off the over-limit amount in full that month. In this way, it's a bit like a hybrid between a credit card and a charge card - there's no pre-set hard limit, and you can spend whatever you like without penalty (if the transaction is approved). There's just a limit on borrowing.

It varies by market (as far as I know, no Visa Signature cards are offered here) and issuing bank, but in the US banks generally offer them for rewards credit cards with limits exceeding 5000 USD.

Mastercard World Elite cards also often offer this, again, I don't know of any in the UK.

Your opening question is a straw man. I never said that such a card would be unfair. I said that that the charging of over limit fees was fair. The two ideas are not mutually exclusive. I made a comment on an actual UK product. You had not explained how such a card would work; you then rectified this omission in your subsequent post.

You might feel that such a product would be nice to have in the UK, but that doesn't mean that the terms of the products currently available are unfair, or, to use your term, "a joke". There is nothing unreasonable about being charged a fee for breaching the terms and conditions of the contract that you freely entered into.

I'm not actually that clear why we would need a card as you describe. If people keep their spending within their means, and keep an eye on what they are spending, then it should never arise as an issue that someone exceeds their limit. Too often people object to paying such fees (and sometimes interest) because they have failed to manage their money effectively. Budgeting is essential for almost all within society, and the population's current reliance on credit to fund day-to-day spending is a shocking indictment on the attitude of many towards money.

In the OP's case I'm not sure that the card you describe would have helped anyway, as he went over his limit as a result of interest charges.

AllieKat

ValiantSon wrote: »

Your opening question is a straw man. I never said that such a card would be unfair. I said that that the charging of over limit fees was fair. The two ideas are not mutually exclusive. I made a comment on an actual UK product. You had not explained how such a card would work; you then rectified this omission in your subsequent post.

You might feel that such a product would be nice to have in the UK, but that doesn't mean that the terms of the products currently available are unfair, or, to use your term, "a joke". There is nothing unreasonable about being charged a fee for breaching the terms and conditions of the contract that you freely entered into.

I'm not actually that clear why we would need a card as you describe. If people keep their spending within their means, and keep an eye on what they are spending, then it should never arise as an issue that someone exceeds their limit. Too often people object to paying such fees (and sometimes interest) because they have failed to manage their money effectively. Budgeting is essential for almost all within society, and the population's current reliance on credit to fund day-to-day spending is a shocking indictment on the attitude of many towards money.

In the OP's case I'm not sure that the card you describe would have helped anyway, as he went over his limit as a result of interest charges.

You asked how it would be fair, when I suggested the UK should have products like Visa Signature, and we should be encouraging banks here to offer them. Asking how something would be fair seems to imply you think it wouldn't be.

The fees are a joke because such fees are meant to cover actual loss under the law, not be punitive. I'm hard-pressed to believe banks lose £12 if someone is a day late on a payment...

It would have helped the OP since they'd just have to pay off the extra interest charge + the normal minimum payment on the next statement. No fee if they do so. That said, most cards with this feature (in countries that have them) have very high interest rates. They're reward cards aimed at a more 'premium' audience, and typically offered in countries where Visa/MC interchange is as high as or higher than Amex interchange is here. I've never seen them in EU countries, with regulated interchange on four-party schemes

As for a more general use case - because I'd encourage anyone to PIF every month and never pay interest - imagine you want to buy a car on your credit card for the points, and you find a car dealer willing to sell you a car on credit (not too common, usually they'll only take partial payment), a flexible spending limit lets you do so (though you may need to call your bank and explain to prevent the transaction being declined, and even then you would want a good history with them). Things like that.

In other words exact same use cases that exist for Amex charge cards with no pre-set limit...