Infographic: The demise of over-limit fees
Credit card customers unanimously opt out of once-common fee
Consumers have
spoken, unanimously: They have decided not to be charged over-limit fees.
Roughly 1 in 10
credit card accounts experience a purchase that would push cardholders' balances
above their credit limits, according to a December 2015 report by the Consumer
Financial Protection Bureau. But consumers are no longer being hit with hefty
penalties for the transgressions.
It's one of
several consumer-friendly outcomes of the Credit Card Accountability, Responsibility, and Disclosure
(CARD) Act of
2009.
Before the act
imposed restrictions on over-limit fees, issuers would willingly authorize
limit-exceeding transactions, but then charge the cardholder a fee for doing so.
The fees averaged close to $35 in 2008.
Although the act
did not prohibit over-limit fees, it required issuers to let consumers decide
whether they wanted to opt-in to the fees. For those opting out, their card
would be declined whenever attempting an over-limit transaction.
In the wake of
the act's passage in 2009, the number of over-limit fees began plunging, from
an assessment rate of about half of the over-limit transactions (44 to 51
percent during 2008 and 2009) to a zero incident rate from the first quarter of
2014 through 2015's second quarter (the most recent data available).
Released December 2015, the CFPB report estimates that the extinction of over-limit fees has saved consumers $9 billion or more during the four-year period of 2011 to 2014.
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