Only in rare cases can it happen that owners overdraw their credit card, because credit cards have fixed limits that cannot be easily exceeded. We’ll tell you what happens if that happens.
A credit card is a good solution for paying without cash – especially when you have to make large expenses. Credit card owners appreciate the advantages of this payment method, as the account is only debited at the end of the month. But what happens if you overdraw your credit card and the account can no longer cover the credit on the card?
Is it even possible to overdraw a credit card?
Credit cards have a fixed credit limit. Another term for this is the credit card limit. How low or high the limit is depends on the type of card as well as the creditworthiness, assets and payment history of the cardholder.
The credit limit is the maximum amount of money that can be used with the card each month. A credit card with a limit of 2,000 euros cannot be overdrawn. This protects cardholders from excessive indebtedness, but also offers protection in the event of theft or loss of a credit card. The provider American Express, for example, always determines credit card limits individually.
Card limit reached: What happens now?
The individual credit card limit determines the maximum amount of money that can be spent with the card per month. If the limit is reached, no further payments can be made with the card.
If a cardholder with a credit limit of 2,000 euros has already charged 1,750 euros to their card, all further payments over 250 euros will be rejected. Smaller amounts under 250 euros are possible without any problem. Anyone who needs more time to pay back the expenses booked on the credit card should choose credit cards that allow longer repayment windows. With the Barclays Platinum Double, transactions only have to be settled within eight weeks.
What are the consequences if the account is not sufficiently covered?
Classic credit cards work on the principle of microcredits. Unlike a debit card, where an expense is paid directly from the buyer’s account, credit card users receive a small loan for the amount of the expense. This loan is reserved on the card. The account is not debited directly. Usually, all expenses are collected on credit cards up to the end of the month, and only then is the user’s account debited to settle all the loans incurred.
If there is not enough money in the account at this time, not all expenses made with the credit card can be paid. This can have negative consequences for the cardholder, such as:
- Interest is charged for the overdraft
- Further debit attempts by the bank may incur charges
- Blocking the credit card
- Negative Schufa entry
To avoid the risk of not being able to pay off the credit card, many providers offer the option of flexible installment payments. Transactions booked on the card can then be paid off in smaller installments. With the TF Bank Mastercard Gold, users have the option of paying in installments.
Overdraw credit card – in consultation with the bank
Although the credit card’s credit limit is fixed, it can still be exceeded in exceptional cases. However, this always happens in consultation with the bank. For example, if an unusually large expense is coming up that cannot be avoided, customers can contact their bank and agree to a temporary overdraft of the credit card limit.
Source: Stern
