Is it possible to increase the credit limit on a card by overpaying a bill? For example, if my card has a $1000 limit with $500 available, can I pay $2000 and have an effective limit of $1500?
Why don’t you call your credit card company and ask them how they handle overpayments? A better answer is why in the world would you want to do that?
YCCCMV but with my corporate diner’s card a similar situation has come up. I asked what would happen if I paid the bill myself to avoid the late fee and losing my bonus points as my company was slow in getting the payment made. They said when the double payment was made I would have a negative balance. I could choose to get a refund check or just use the card as normal to use up the balance. It is not a increase in my credit line since it would be my money, not borrowed from the bank.
Caveat emptor though, a few years ago I heard a story on NPR about a CC scam that was similar. The CC laws required the bank to post the payment as soon as it was recieved even if the check hadn’t cleared. Crooks would send a bad check for a large amount and start spending with the card as soon as it was posted. I don’t know what safeguards are in place to prevent this but you should ask your bank if they allow it.
Having been a bank manager once I can assure you the answer is yes. Your credit limit is 1500. If you overpay your bill by 500, that is money they owe you over and above the credit they are willing to extend to you.
I used to work for a property management company. We had a business Visa with a $50K credit limit (iirc). We would pay all of the bills with that credit card, including electricity bills which totalled around $500K a month. We would wire money to Visa and then pay all of this bills at once which would normally go over the credit limit. (Did I mention that this was a frequent flier rewards card?)
Having working in the credit card industry I can assure you that answer is maybe ( ). It depends on your credit card company, the best way to find out is to call and ask. It is not an uncommon question. I worked at a credit card processing center for many different credit cards and the rules varied by bank.
Some, especially in the high risk category, didn’t allow you to overpay your account. There is a risk of your payment not clearing and the bank would now be stuck in excess charges. Many people tried to attempt this scam on us.
I don’t get your math. If you have $1000 limit and $500 available, that would mean you have a $500 balance. A $2000 payment would be applied as $500 to paying off your balance and an surplus of $1500. Your effective spending limit would be that $1500 plus your normal credit limit of $1000 = $2500.
For others who don’t realize it, one might prepay like this beacause your want to make a $2500 purchase but don’t have the credit. Perhaps paying another way is inconvienient, such as making an online purchase or being overseas. Or you want the consumer protections that paying with a credit card affords.
I artificially increase my credit limit almost every month, just by paying my bill (online) more than once a month.
For instance, if I have a big trip on a weekend early in the month, and use up most of my credit, I will check my account balance and pay it (with a transfer from my bank). The next day, the payment will be reflected on my credit card account, and my available credit adjusted accordingly.
Must be nice to have those frequent flyer rewards…
One good reason to do that is that you want to make a big-ticket purchase and the vendor does not want to accept payment by personal cheques or wire transfers, but accepts a major credit card, only your limit is less than the total.
I ran into this situation when I wanted to buy my first fancy laptop computer. Fortunately, when I called my mastercard customer service line and asked if they could increase my card limit, they were only too happy to.