Creating a negative balance on a credit card to make a charge that's greater than the credit line

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Ron Ronnerson
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Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Ron Ronnerson »

I recently opened up a credit card and wanted to charge my property tax bill onto it. This will enable me to meet the minimum spending requirement on the new credit card account and earn a bonus. The issue is that the credit line is for $5k while the property tax bill + fee for paying by credit card would total $5375. I'm unable to make a partial payment toward property taxes as my county doesn't permit that.

I was wondering if it would be okay to make a $400 payment toward the credit card as soon as I receive it in order to create a credit balance and then charge the $5375. I did look into the credit card company's policy on credit line increases and it looks like they don't do it on new accounts. So I'm wondering if it's okay to implement my idea or is there an issue with it? Would the credit card company even allow a charge that's greater than the credit line even if there is a credit balance?
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by TropikThunder »

Ron Ronnerson wrote: Sat Dec 04, 2021 7:05 pm I recently opened up a credit card and wanted to charge my property tax bill onto it. This will enable me to meet the minimum spending requirement on the new credit card account and earn a bonus. The issue is that the credit line is for $5k while the property tax bill + fee for paying by credit card would total $5375. I'm unable to make a partial payment toward property taxes as my county doesn't permit that.

I was wondering if it would be okay to make a $400 payment toward the credit card as soon as I receive it in order to create a credit balance and then charge the $5375. I did look into the credit card company's policy on credit line increases and it looks like they don't do it on new accounts. So I'm wondering if it's okay to implement my idea or is there an issue with it? Would the credit card company even allow a charge that's greater than the credit line even if there is a credit balance?
Most credit cards I know of have a limit to how much of an over-payment you can make (I don’t know if it’s a $ amount or a %), but yes you can. Doesn’t hurt to try.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by JustMe »

Ron Ronnerson wrote: Sat Dec 04, 2021 7:05 pm Would the credit card company even allow a charge that's greater than the credit line even if there is a credit balance?
I wanted to do something similar once, but Citi customer service told me they would not honor a charge greater than the credit limit, even with a credit balance. I don't know what the policy might be for other credit cards or issuers, but the representative I spoke with was very sure of their answer.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by bradinsky »

I have a Capital One card & a few months back I tried to make a payment for the existing balance plus the unposted charges. They refused the payment because it was more than the existing balance. Now I wait until all charges are posted & pay in full. Guess they won’t allow you to pay to create a negative balance.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by ResearchMed »

Ron Ronnerson wrote: Sat Dec 04, 2021 7:05 pm I recently opened up a credit card and wanted to charge my property tax bill onto it. This will enable me to meet the minimum spending requirement on the new credit card account and earn a bonus. The issue is that the credit line is for $5k while the property tax bill + fee for paying by credit card would total $5375. I'm unable to make a partial payment toward property taxes as my county doesn't permit that.

I was wondering if it would be okay to make a $400 payment toward the credit card as soon as I receive it in order to create a credit balance and then charge the $5375. I did look into the credit card company's policy on credit line increases and it looks like they don't do it on new accounts. So I'm wondering if it's okay to implement my idea or is there an issue with it? Would the credit card company even allow a charge that's greater than the credit line even if there is a credit balance?
Have you considered calling them and explaining, and asking if they can either up your credit a bit, at least temporarily?
It's not like you are asking to up a $5k limit to $25k or something.

RM
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Ron Ronnerson
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Ron Ronnerson »

ResearchMed wrote: Sat Dec 04, 2021 7:31 pm
Ron Ronnerson wrote: Sat Dec 04, 2021 7:05 pm I recently opened up a credit card and wanted to charge my property tax bill onto it. This will enable me to meet the minimum spending requirement on the new credit card account and earn a bonus. The issue is that the credit line is for $5k while the property tax bill + fee for paying by credit card would total $5375. I'm unable to make a partial payment toward property taxes as my county doesn't permit that.

I was wondering if it would be okay to make a $400 payment toward the credit card as soon as I receive it in order to create a credit balance and then charge the $5375. I did look into the credit card company's policy on credit line increases and it looks like they don't do it on new accounts. So I'm wondering if it's okay to implement my idea or is there an issue with it? Would the credit card company even allow a charge that's greater than the credit line even if there is a credit balance?
Have you considered calling them and explaining, and asking if they can either up your credit a bit, at least temporarily?
It's not like you are asking to up a $5k limit to $25k or something.

RM
Yes, I'm considering that. However, I also don't want my credit run again for such a small increase and wasn't sure if they'd need to do that to adjust the limit, even if it is by a slight amount.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Gryphon »

One way to get a negative balance on a credit card is by redeeming cash back points. A couple years ago I had a credit card I wasn't using much anymore except for a small monthly bill just to keep a bit of activity on it so it didn't get cancelled. I had accumulated some cash back points so I redeemed those thinking that I would let the monthly bill nibble away at it over the next 6 months or so. It didn't work out that way - after 3 statements with a negative balance they sent me a check for the rest. But for those 3 statements I had a negative balance.

That's not going to help you this year, but maybe by next fall you could accumulate enough points?
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Ron Ronnerson »

Gryphon wrote: Sat Dec 04, 2021 7:47 pm One way to get a negative balance on a credit card is by redeeming cash back points. A couple years ago I had a credit card I wasn't using much anymore except for a small monthly bill just to keep a bit of activity on it so it didn't get cancelled. I had accumulated some cash back points so I redeemed those thinking that I would let the monthly bill nibble away at it over the next 6 months or so. It didn't work out that way - after 3 statements with a negative balance they sent me a check for the rest. But for those 3 statements I had a negative balance.

That's not going to help you this year, but maybe by next fall you could accumulate enough points?
Yeah, that won't work as I need to make the charges within 3 months to earn the bonus. But thanks for the idea in any case as it's good to know.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Nate79 »

Some people have got their cards shutdown by cycling their credit within a month (making payments within the month to have total spend within the month greater than the credit limit). Credit card companies do not look kindly on these games. Call them to get a credit limit increase or find another card.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by UpperNwGuy »

Don't do it. If you read myFICO and other credit card blogs you will read the stories of those who got in trouble with their credit card issuers for doing what you want to do. Many card issuers won't let you make a payment larger than your current balance because they don't want you to inflate your credit limit. The credit limit they give you is the most that they will allow for a single charge, and even that is pushing it. Google the phrase "bust out fraud."

Can't you split your property tax payment between two cards?
Last edited by UpperNwGuy on Sat Dec 04, 2021 8:05 pm, edited 1 time in total.
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Ron Ronnerson
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Ron Ronnerson »

Nate79 wrote: Sat Dec 04, 2021 7:58 pm Some people have got their cards shutdown by cycling their credit within a month (making payments within the month to have total spend within the month greater than the credit limit). Credit card companies do not look kindly on these games. Call them to get a credit limit increase or find another card.
Sounds good. This is what I'll do. If they can't raise the limit without pulling credit again, I'll just meet the minimum spending requirement for the bonus another way. I've got an insurance bill coming up, I can load up my Amazon account, prepay the electric bill by a couple of months, do some holiday shopping, etc.

Thanks for the responses, everyone. Much appreciated.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Ron Ronnerson »

UpperNwGuy wrote: Sat Dec 04, 2021 8:03 pm Don't do it. If you read myFICO and other credit card blogs you will read the stories of those who got in trouble with their credit card issuers for doing what you want to do. Many card issuers won't let you make a payment larger than your current balance because they don't want you to inflate your credit limit. The credit limit they give you is the most that they will allow for a single charge, and even that is pushing it. Google the phrase "break out fraud."

Can't you split your property tax payment between two cards?
No, the payment can't be split up. I didn't think it would be a big deal but sounds like it's frowned upon so I won't be doing it. Thanks for the info.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by curmudgeon »

PG&E hasn't given us any issue when making substantial overpayments. We generally pay a few months at a time (saves a few dollars on their CC fee as well). Other utilities as well. I think banks and CC companies are stickier about this in part because they have fussy regulators looking over their backs with gazillions of rules.

One game you can play with an ACA plan (but it requires good cash reserves) is to estimate your income as too high for the subsidy when you sign up; you then pay the full premium every month on the credit card you are using for bonuses. When you file taxes, you get those payments back (ACA subsidy is "refundable"). I did this for a couple of years when we first retired, but eventually decided not to bother.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Ron Ronnerson »

curmudgeon wrote: Sat Dec 04, 2021 8:31 pm PG&E hasn't given us any issue when making substantial overpayments. We generally pay a few months at a time (saves a few dollars on their CC fee as well). Other utilities as well. I think banks and CC companies are stickier about this in part because they have fussy regulators looking over their backs with gazillions of rules.

One game you can play with an ACA plan (but it requires good cash reserves) is to estimate your income as too high for the subsidy when you sign up; you then pay the full premium every month on the credit card you are using for bonuses. When you file taxes, you get those payments back (ACA subsidy is "refundable"). I did this for a couple of years when we first retired, but eventually decided not to bother.
Thanks for the suggestions. I typically make PG&E payments for a few months at a time as well and you're right, I could do that for some other bills too. I could buy some gift cards also. I'm sure I'll be able to meet the minimum spending requirement one way or another. It would've just been nice to be able to do it with one transaction but, in the grand scheme, it's not really all that big of a deal.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Sprucebark »

Has your credit card generated a statement yet? Sometimes you can’t even add payment info until a statement has closed. And even then, sometimes the programming will be smart enough to prevent an over payment. Were you planning on mailing a check?
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Ron Ronnerson »

Sprucebark wrote: Sat Dec 04, 2021 8:48 pm Has your credit card generated a statement yet? Sometimes you can’t even add payment info until a statement has closed. And even then, sometimes the programming will be smart enough to prevent an over payment. Were you planning on mailing a check?
The account was opened just today. I set up online access and linked a bank account to make auto-payments in the future. However, I didn't try to make an additional payment in advance. Instead, I posted here first to see if creating a negative balance would be a good idea. The feedback has been not to do it so my plan now is just to ask for a small credit line increase when the card arrives in the mail but I'll check to see if they can do this without pulling credit again. If they can do it, that would be ideal. Otherwise, I'll make various charges such as buying gift cards, paying insurance, prepaying bills (electric, cable, etc.) in order to meet the spending requirements to earn the bonus.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Contador314 »

If you had a way to get a charge refunded then you can charge $400 to the card, let it settle, then pay it and refund it.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Vulcan »

bradinsky wrote: Sat Dec 04, 2021 7:27 pm I have a Capital One card & a few months back I tried to make a payment for the existing balance plus the unposted charges. They refused the payment because it was more than the existing balance. Now I wait until all charges are posted & pay in full. Guess they won’t allow you to pay to create a negative balance.
A push ACH from a bank account's bill pay usually does the tirck.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Ron Ronnerson »

Thanks for the ideas, everyone. I think I’m set on a plan at this point.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by bradinsky »

Vulcan wrote: Sat Dec 04, 2021 9:29 pm
bradinsky wrote: Sat Dec 04, 2021 7:27 pm I have a Capital One card & a few months back I tried to make a payment for the existing balance plus the unposted charges. They refused the payment because it was more than the existing balance. Now I wait until all charges are posted & pay in full. Guess they won’t allow you to pay to create a negative balance.
A push ACH from a bank account's bill pay usually does the tirck.
Nope. Didn’t work. I wasn’t trying to create a negative balance, just pay the entire amount. I hate owing money to anyone!
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Pdg88 »

Even if you are not approved for a credit line increase, most credit card issuers allow you to go over your credit limit by a small margin. It may be worth trying the transaction anyway. Worst case scenario it gets declined.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by whodidntante »

Nate79 wrote: Sat Dec 04, 2021 7:58 pm Some people have got their cards shutdown by cycling their credit within a month (making payments within the month to have total spend within the month greater than the credit limit). Credit card companies do not look kindly on these games. Call them to get a credit limit increase or find another card.
I've never heard of anyone getting shut down for one overpayment. It's not cycling. Cycling tends to be associated with manufactured spending. E.g.:

Week 1: Charge 25k on a 30k limit. Pay 25k.
Week 2: Charge 25k. Pay 25k.
Rinse and repeat until shut down.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Sprucebark »

whodidntante wrote: Sat Dec 04, 2021 10:45 pm
Nate79 wrote: Sat Dec 04, 2021 7:58 pm Some people have got their cards shutdown by cycling their credit within a month (making payments within the month to have total spend within the month greater than the credit limit). Credit card companies do not look kindly on these games. Call them to get a credit limit increase or find another card.
I've never heard of anyone getting shut down for one overpayment. It's not cycling. Cycling tends to be associated with manufactured spending. E.g.:

Week 1: Charge 25k on a 30k limit. Pay 25k.
Week 2: Charge 25k. Pay 25k.
Rinse and repeat until shut down.
Why would credit card companies be opposed to this?
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by whodidntante »

Sprucebark wrote: Sat Dec 04, 2021 10:49 pm
whodidntante wrote: Sat Dec 04, 2021 10:45 pm
Nate79 wrote: Sat Dec 04, 2021 7:58 pm Some people have got their cards shutdown by cycling their credit within a month (making payments within the month to have total spend within the month greater than the credit limit). Credit card companies do not look kindly on these games. Call them to get a credit limit increase or find another card.
I've never heard of anyone getting shut down for one overpayment. It's not cycling. Cycling tends to be associated with manufactured spending. E.g.:

Week 1: Charge 25k on a 30k limit. Pay 25k.
Week 2: Charge 25k. Pay 25k.
Rinse and repeat until shut down.
Why would credit card companies be opposed to this?
They probably wouldn't care at all if your income supports it and it's not primarily gift cards or things that can be turned into cash. In fact, they might reward you for it. AmEx is known to send gifts (nice gifts not crap) and invitations to their secret handshake card if you ring the bell. But that's AmEx. Visa and Mastercard issuers tend not to get as big a share of the swipe fees. So they could actually lose money on such activity, depending on the reward rate.

Thousands spent at grocery stores or Simon malls along with weird payments coming frequently from various sources could be money laundering or some other boogeyman. Issuers are under a regulatory obligation to monitor for such things and they don't have a sense of humor. The pace in my example would put 1.3 million through the card in a year. If you hang out in manufactured spending circles, you'll see there are some whales. Some people ride the pony until it dies.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by fufgirl »

Think like this- the bank gives you x amount of credit for each 30/90/365 day period. If you go and charge more than that amount frequently you’re basically forcing them to accept greater chargeback/fraud risk etc than they agreed to. Where each one draws the line is going to depend.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by mpsz »

Is there any way to pay ~$400 by check and then pay the rest by card? Eg, could you just send them a check for $400 in the mail and pay the remainder on the card?

Is PayPal an option? I use it heavily and I've seen the option to split payment. Not sure if that's limited to certain stores or available everywhere.

I wouldn't attempt to go beyond your spending limit in the first month, seems like a good way to get your card shut down. Especially if you are a brand-new customer to the bank.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by brad.clarkston »

Nate79 wrote: Sat Dec 04, 2021 7:58 pm Some people have got their cards shutdown by cycling their credit within a month (making payments within the month to have total spend within the month greater than the credit limit). Credit card companies do not look kindly on these games. Call them to get a credit limit increase or find another card.
+1 this. Most if not all lenders have tightened up on those kinds of games and do not look kindly at any attempt.

I would ask for a limit increase with the reason why.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by fourwheelcycle »

I set my elderly father's credit limit at $1,000 to reduce the risk if he gives his credit card number to a scammer. He called me to ask if he had enough credit room for a $700 charge. I checked his account and saw his card was already up to $300 for the month, so I processed an early payment of $500 for the outstanding $300 amount. No problems, it all worked out fine.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by tibbitts »

It's interesting that paying off balances frequently can be a problem. I've been doing that for a few years now with most of my cards - it just annoys me seeing the balance plus it's not like they're very large or that cash is earning anything. So I might make a half-dozen payments per month. I don't think I've ever used that to possibly charge more than the credit limit per month, although I have a new $1k minimum spend due in three months for a bonus where that might come in handy. I have only a $500 credit limit on the card, so if I had an appropriate expense I'd try it. I was counting on charging a single $1.1k December amount when applying, until I learned about the tiny credit limit, so the easy way to complete the bonus requirement won't work.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by DrGrnTum »

Sprucebark wrote: Sat Dec 04, 2021 10:49 pm
whodidntante wrote: Sat Dec 04, 2021 10:45 pm
Nate79 wrote: Sat Dec 04, 2021 7:58 pm Some people have got their cards shutdown by cycling their credit within a month (making payments within the month to have total spend within the month greater than the credit limit). Credit card companies do not look kindly on these games. Call them to get a credit limit increase or find another card.
I've never heard of anyone getting shut down for one overpayment. It's not cycling. Cycling tends to be associated with manufactured spending. E.g.:

Week 1: Charge 25k on a 30k limit. Pay 25k.
Week 2: Charge 25k. Pay 25k.
Rinse and repeat until shut down.
Why would credit card companies be opposed to this?
Banks assign you a credit limit based on the information you provide on your CC application and the information they pull from your credit report. When you cycle your credit, you are circumventing the risk that they have assigned to your account. You may be able to get away with it once or twice, but if you do it on a consistent basis you will most likely get shut down.

Reports of Accounts being shut down for CC cycling are numerous on the CC churning sites. Not only is the CC account shut down, but all other accounts are shut down as well. Your checking, savings and other credit card accounts are also shut down.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by ResearchMed »

tibbitts wrote: Sun Dec 05, 2021 9:56 am It's interesting that paying off balances frequently can be a problem. I've been doing that for a few years now with most of my cards - it just annoys me seeing the balance plus it's not like they're very large or that cash is earning anything. So I might make a half-dozen payments per month. I don't think I've ever used that to possibly charge more than the credit limit per month, although I have a new $1k minimum spend due in three months for a bonus where that might come in handy. I have only a $500 credit limit on the card, so if I had an appropriate expense I'd try it. I was counting on charging a single $1.1k December amount when applying, until I learned about the tiny credit limit, so the easy way to complete the bonus requirement won't work.
I'm also surprised that paying off balances throughout the month, or apparently even once mid-month is considered - or might be considered - as some sort of scam, absent any other information that might warrant suspicion.

Indeed, for those who don't like "being in debt", much the way tibbits describes, but so much so that they refuse to use credit cards at all, there is a frequent suggestion here on BH to pay off the balance frequently... keep that "debt" at zero. That makes it almost like a debit card, but with all of the advantages of credit cards: consumer protections, approximately 2% cash back in some cases, and sometimes other perks.

This "bust out fraud" [a new phrase for me] is not simply paying more than once per month. It is apparently working to get credit limits higher and higher and higher, and perhaps doing this with more than one charge card at the time, for nefarious purposes.
I have no idea what else bad actors could do with "mid-cycle payments"...

It's quite different to request a single higher credit limit (permanently or for one specific use), more commensurate with one's spending needs, or to make a mid-cycle payment in order to make higher than credit limit/usual monthly spend... and *not* constantly charging more and more and more to get that credit limit higher and higher.

By now, I'd assume that the charge card vendors' AI are "on the lookout" for many variations of this theme, beyond mid-cycle payments.
In fact, if one kept charging and paying off more and more mid-cycle each month, and payments weren't bouncing, all the credit card vendor needs to do is NOT to "keep upping the credit limit", as one relatively simple deterrent (at least as I understand the "problem").
And the charge card vendor would keep collecting more and more fees from that increased spend.
Perhaps I'm not imaginative enough to envision more of the nefarious possibilities, and I'd recommend that we NOT post lots of them here, in public. :shock:


DrGrnTum wrote: Sun Dec 05, 2021 11:08 am Banks assign you a credit limit based on the information you provide on your CC application and the information they pull from your credit report. When you cycle your credit, you are circumventing the risk that they have assigned to your account. You may be able to get away with it once or twice, but if you do it on a consistent basis you will most likely get shut down.

Reports of Accounts being shut down for CC cycling are numerous on the CC churning sites. Not only is the CC account shut down, but all other accounts are shut down as well. Your checking, savings and other credit card accounts are also shut down.
[emphasis added]

I'm still not understanding what "risk" one is circumventing. The "risk", I thought, was the exposed credit outstanding. One can't default on extra mid-cycle payments that have already been paid, while keeping the outstanding credit balance as originally approved by the lender.
I find it difficult (but not impossible) to believe that there is not "more to it than this" (the mid-cycle payments).

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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by Sprucebark »

I know this is a few month old thread but I posted previously in it.

I had my credit card set up for auto pay. About a day before the auto pay date I tricked the system and did a manual payment just to see what happens. Both payments posted. I ended up with a credit balance (payments exceeded spending). My available credit increased as well by the amount of the credit.

Example-

Credit limit $5,000
Spent $4,000
Payment 1- $4,000
Payment 2- $3,500
Net balance after payments- ($3,500)

Credit limit $8,500

I can spend up to the credit limit, so it looks like the OP’s method would have worked.

I would not recommend doing this every month, but I don’t see a problem with a one time overpayment and then making a large charge to get the balance back down.
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by riverant »

I have an Amex card that used to be my primary. I noticed about a year after I stopped using it (aside from Netflix), I had amassed a $400 reward balance. Amex apparently isn’t really “cash back”, it’s a statement credit only. So my balance for a few months was -$400 or so until I bought groceries. But the I earned cash back… and the cycle continues.
tonyclifton
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Re: Creating a negative balance on a credit card to make a charge that's greater than the credit line

Post by tonyclifton »

My Chase card seems to only accept payments totaling current balance plus plus pending charges.

The website gives an error and won’t accept a larger payment.
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