Author Topic: Low limit credit card that stops at credit limit without charging fee?  (Read 790 times)

Gone Fishing

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I'm trying to help a slightly irresponsible young adult build some credit without running up a large balance or getting dinged with fees if they hit the limit.

PoutineLover

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Re: Low limit credit card that stops at credit limit without charging fee?
« Reply #1 on: September 13, 2021, 11:50:29 AM »
If you don't think they are responsible enough to use a card properly, carefully consider if they need a card at all.
If the risk is worth it, perhaps look into secured credit cards, where you put a deposit that acts as collateral.

Gone Fishing

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Re: Low limit credit card that stops at credit limit without charging fee?
« Reply #2 on: September 13, 2021, 12:00:42 PM »
Looks like over limit fees are largely a thing of the past...

https://www.nerdwallet.com/article/credit-cards/overlimit-fees-dinosaur

APowers

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Re: Low limit credit card that stops at credit limit without charging fee?
« Reply #3 on: September 13, 2021, 03:34:50 PM »
Okay, now I'm confused. What's the point of a limit if it doesn't make the card decline a transaction at the register?

Gone Fishing

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Re: Low limit credit card that stops at credit limit without charging fee?
« Reply #4 on: September 13, 2021, 04:42:39 PM »
Okay, now I'm confused. What's the point of a limit if it doesn't make the card decline a transaction at the register?

Back in the olden days it was just an excuse to charge you another fee.  Just like your checking account, the bank could choose to pay the item or not.  The idea being that your card wouldn't be declined if you were a few dollars over your limit while trying to pay for the meal you already ate.

Villanelle

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Re: Low limit credit card that stops at credit limit without charging fee?
« Reply #5 on: September 21, 2021, 01:19:53 PM »
Okay, now I'm confused. What's the point of a limit if it doesn't make the card decline a transaction at the register?

It's like being 15 minutes late to work.  One time and you probably won't be fired, but that doesn't mean there's no "point" of a start time.  It just means that if you are an otherwise good employee, you'll likely be given some grace. 

The article lists possible things that happen--varies by card--if you go over the limit.  Some do decline the charge, but they might also increase interest, lower your limit after that charge, make you pay immediately instead of your due date, or other things.  The 'point' of the limit still stands.  The bank doesn't want to lend you more than that and won't longer term, but they may forgive the occasional mistake, especially if you have a strong history of paying on time and the overage is a rare exception.

yachi

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Re: Low limit credit card that stops at credit limit without charging fee?
« Reply #6 on: September 21, 2021, 01:30:55 PM »
I'm trying to help a slightly irresponsible young adult build some credit without running up a large balance or getting dinged with fees if they hit the limit.

To build up credit faster, you can add them as a user to your oldest credit card (not American Express). 

Cut up their card when it shows up at your house so they can't be irresponsible with it, and don't charge more than 1% of the credit card maximum limit.  Do make at least some purchase on it for a few months.  The card will be added to their credit report with all its payoff history as if they had it from day 1, and there is little chance they'll dig themselves into a worse situation.

There's a whole credit-building business around the technique, with some mustachians getting paid to help.

 

Wow, a phone plan for fifteen bucks!