Maria Adams, Credit Cards Moderator
@m_adams
No, you generally cannot prepay your credit card for a large purchase. Your credit limit is typically the maximum dollar amount you can access for purchases. So, you cannot increase it by overpaying your credit card, not even temporarily.
If you pay more than the total balance on your credit card, you will just wind up with a negative balance. In this case, you can either leave the negative balance on your account to cover future purchases, or ask the issuer for a credit balance refund.
Going Over Your Credit Card Limit
Most major credit card companies will not authorize transactions that exceed your credit limit in the first place. There are some issuers, though, that accept over-the-limit transactions.
The PenFed Credit Union, for example, allows for payments up to 110% of a cardholder’s balance. Some issuers allow you to opt-in to go over the limit, but you will be charged over the limit fees that are usually quite high.
Alternatives to Prepaying Your Card for a Large Purchase
- Ask for credit limit increase.
You can contact your credit card’s issuer and ask for a credit limit increase. To increase your chances of being approved for a higher credit limit, make sure to pay your bill on time for at least six straight months, reduce your outstanding debt, and update your income information. Depending on the issuer, requesting a credit limit increase can hurt your score, but only in the short term. - Apply for a 0% APR credit card.
With a 0% APR credit card, you pay no interest on new purchases for a certain period of time after you open the credit card account. The best 0% APR credit cards on the market currently give 15-21 months without interest. By the end of the 0% intro period, though, the card’s regular interest rate will apply to whatever balance remains.
It’s worth noting that it’s a bad idea to max out your credit card, as credit utilization is an important factor that determines your credit score. This means that if you use your credit card’s entire line of credit, it will put a dent in your score.
People also ask
What does a negative balance on a credit card mean?
A negative balance on a credit card means your balance is below zero, and your credit card company owes you money rather than the other way around. Your credit card balance could be negative if you make a payment that's a lot larger than the balance due or if you receive a credit to your account. Credit card companies generally prevent you from paying more than you owe, especially online, but if you pay by check,...
read full answer by WalletHub, Financial CompanyWhat is an overlimit fee?
An over-limit fee is a credit card fee charged when a cardholder spends more than the card’s credit limit. Legally, thanks to the Credit CARD Act, card issuers are not allowed to charge over-limit fees unless the cardholder has explicitly given the card issuer permission to process over-limit charges.
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read full answer by WalletHub, Financial CompanyHow much can I go over my credit card limit?
How much you can go over your credit limit depends on the credit card you have. Most credit cards will not allow you to spend over the limit. While some issuers allow you to opt-in to go over the limit, you will be charged over the limit fees that are usually quite high.
What you should know about going over your credit limit:
- It is best to avoid spending over your credit...
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