Over-The-Limit Block At Chase Could Save You Money

I've been a credit-card customer at Chase for almost 10 years. And yet, I only recently learned -- in the last three days -- that Chase has something called an "over-the-limit block." A friend of mine, who knows Chase's operations well, says that it's something the bank does not advertise. Still, the ability to block purchases that would take a card over its limit does exist. All it takes is a simple phone call to get the block put on an account.

The over-the-limit block will work for every Chase card -- except Chase's Signature products. Those are no-preset-limit cards that are designed to allow for purchases that go above and beyond stated credit limits (those customers are not assessed a fee if they do go over the limit). Thus, these so-called "access lines," which is what Chase calls these Signature cards, are not eligible for over-the-limit blocks.

Also, over-the-limit blocks work for most purchases -- but not all. The block, for example, would not work with two-step purchases. Think of a gasoline purchase, for instance. The customer's credit card is authorized for an initial $1 at the pump. Chase has no idea how much the customer will actually charge above that $1 authorization, though. While the authorized dollar might not take a customer over the limit, the amount of fuel that the customer ultimately purchases could. Under limited circumstances like this, an over-the-limit block won't prevent a purchase from taking a customer above his or her limit. (Get the full details from a Chase customer-service representative.)

On the whole, though, a block will work for most things. For instance, let's say that you have a credit limit of $5,000 on your Chase card. Assume that your balance is currently at $4,976. What's more, assume that you're out shopping. You find a nice pair of shorts for $35 (including tax). You decide to buy the shorts using your Chase card. Assuming your purchase goes through (and it very likely will), your balance will now be over the limit. Indeed, your balance will now be at $5,011. As a result, your card will be assessed an over-the-limit fee of $39 (since balances of $250 or more are assessed the highest over-the-limit fee that Chase charges). An over-the-limit block, though, would have prevented that purchase from going through. Sure, you wouldn't have been able to buy the shorts, but you also wouldn't have been charged an additional $39 either, which would have brought the full value of those shorts to $74 (if you add the fee to the price of the shorts). That's an expensive pair of shorts!

Why doesn't Chase tell its customers about this block feature? The short answer is that Chase allows purchases to go through, even if these purchases would take the customer over the limit, as a "courtesy" to its customers. That's the company line. It's a courtesy, I am told, because it allows the customer to make a purchase that he or she would not otherwise be able to make. Therefore, the customer in my hypothetical walks away with the shorts -- but also pays $39 for the privilege. Of course, in some cases -- with large, expensive purchases, for example -- an over-the-limit fee may be worth accruing (think of an important purchase that takes you over the limit by $3). That's the courtesy that Chase is touting.

The reality, of course, is that Chase doesn't advertise its over-the-limit block because it doesn't make good business sense -- for Chase. While it would be great for the customer, it would be terrible for Chase. Chase, like every other card issuer in this country, makes a boatload of money each year from the penalty fees that is collects from customers who exceed their credit limits and make late payments. Chase, in other words, has no financial incentive to promote this block.

While customers should avoid maxing out their credit cards, it happens. It's a fact that some customers, who are nearly maxed out, go over their credit limits from time to time. For these customers, rest assured that Chase is unlikely to prevent your purchases from taking you over the limit. As a "courtesy," Chase, even if your purchase takes you over the credit limit, will typically not stop you from getting that item you really want or need. But you'll pay a fee for the privilege.

Still, if you're no longer interested in having the privilege (or courtesy) of going over your credit limit, you should call Chase and request an over-the-limit block today.

And a note my readers: if other card issuers have this feature as well, please let me know. Leave a note in the comments section.