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Q: How can I get a credit card that doesn’t allow me to exceed my credit limit?
A: I get it. No one likes paying over limit fees. Frankly, you’d probably rather deal with the embarrassment of having the transaction declined.
Unfortunately, having the card allow the transaction and charge you the fees is an all-too common scenario.
Especially with younger consumers, the story goes something like this:
Consumer gets credit card. Consumer doesn’t properly monitor spending with credit card. Consumer falls into debt and trashes credit rating.
Many people who have been through this process have sworn never to repeat their mistakes. And some are taking near-Draconian measures in the name of preserving their creditworthiness.
This segment of the marketplace is being courted by MasterCard’s inControl program. MasterCard is partnering with Citigroup to offer a credit card which enables users to stop themselves from getting into debt before they can actually do so.
The inControl program has been around since 2007, but has been used primarily with corporate cards and accounts. However, this new credit card can let consumers:
- Permit MasterCard to automatically reject any transaction which puts an account above a credit limit
- Set a monthly or quarterly budget for certain categories (like groceries or dining) and reject any transactions above that preset budget amount
- Receive text messages indicating that cardholders are above their budgeted spending amounts
The timing of this card is interesting because of the fact that many banks are now reviewing and changing their overdraft policies on checking and savings accounts as well.
Update: Thanks to the Credit Card Act, your issuer can no longer charge you for over-limit fees unless you opt-in for this program.
Instead of giving your card company permission to allow “over-draft protection”, I suggest making sure you have a back-up card. This way, when the transaction is declined on one card, you can pay cash or use your back-up card instead.