Using a Credit Card like a Debit Card (Prepaying "Overpaying" C.C.?)

pthor1231 said: Credit Card companies don't like seeing credit balances. You might spook them out, all for nothing. Is checking to see if your balance is < 500 really that much harder than checking to see if its less than 0?

Any ideas what they might do? Would I be violating a user agreement and risk terminating my rewards program? In my case it's less the math, and more that I love the feeling of not owing debt. The money is set aside, out of site out of mind mentality.

I can't imagine it would be bad for a credit score right? If nothing else I would think it would benefit your credit score. A high credit limit, and barely ever cracking a balance I would think could drive your score up.

I seem to recall years ago accidentally overpaying a credit card, and they sent a check for the overpayment. I can't recall if they did it at the end of the statement period or waited till the next one. Either way, it would be more practical to just get a bank account with a debit card.

If you use an account at a different bank from your regular checking account, you could treat it exactly the same as a credit card. Start by depositing the balance you want to use as your "credit limit." Put an entry in your calendar to refresh it each month.

llcwannabe said: pthor1231 said: Credit Card companies don't like seeing credit balances. You might spook them out, all for nothing. Is checking to see if your balance is < 500 really that much harder than checking to see if its less than 0?

Any ideas what they might do?

Close your account. Frequent negative balances are assocated with money laundering by the card companies, whether this is correct or not.

llcwannabe said: budget about $500 every two weeks for all my expenses on my credit card. What if instead of racking up my bill, and then paying it off... if I just pay in advance. Essentially always being a step ahead of the 8-ball. For example if my balance goes to -$500 at the begin of a pay cycle, I would slowly work my way to an even balance. Never occurring any kind of debt in the process. Points would still be earned, security perks still exist, and I have any easy way to tell when I go over my budget. (Any balance over $0)
You budget $500 for the month. Your credit card has a $2500 limit.

Prepay your card by that $500, and you now have the ability to spend $3,000 on that card, or overspend your budget by $2500.

Keep the $500 untouched in a bank account, and you now only have the ability to spend $2500 on that card, or overspend your budget by $2000.

There is absolutely no reason to prepay your credit card in this manner, there is no advantage.

2 things I suggest

1) Get text alerts that texts you every $50/$100 you spend.
2) Set your limit to 500.

Pay each month.

..so basically give the credit cards an interest free loan instead of putting it into an interest bearing account..brilliant idea!
while oyu are at it, why don't you prepay your taxes by like $50K. that way you can work your way back to 0 or the next 20 years too.

Two words - FORGET IT
Even before money laundering was a major concern nationally, credit card companies have had an aversion to the CC accounts prepaying by more that a few dollars. What was happening was the overpayment was jacking up the CL temporarily and then the cardholder would go max out the card leaving the card issuer holding the bag. You WILL get flagged.

The better plan is place the $500.00 or whatever into a checking account that you authorize the CC issuer to automatically draw from each month. Set up email or phone paging alerts when you approach the desired spending/budgeted amount.

I used to work for a CC processor in CC security.

I agree with "forgetting it." This has been discussed on CreditBoards. Banks can get weird about this. While a small credit balance they most likely won't care about, a large overpayment out of nowhere gets noticed. They often view it as potential fraud. The bank may close your account and refuse to reopen it.

If you really want to use a debit card, use it with your checking account. I wouldn't advise prepaying a credit card to do the same.

Glitch99 said: JW said: Even before money laundering was a major concern nationally, credit card companies have had an aversion to the CC accounts prepaying by more that a few dollars. What was happening was the overpayment was jacking up the CL temporarily and then the cardholder would go max out the card leaving the card issuer holding the bag. You do realize that prepaying $10k to artificially increase your credit limit to $25k, then maxing out the $25k, leaves the card issue holding the same 'bag' as simply maxing out the actual $15k limit....My comment reflected the practice and concerns of many card issuers. I worked for a CC processor for about 9 years. What I realize is not material to the comment.

I pay my credit card every two months, in the month I pay I generally put and extra $500 down and than I use a check book to keep track. I do this just because I don't really want to use credit but I like getting the perks of Cash Back from my card. I haven't had any trouble doing this, maybe because by the time they get my payment a couple of days before it is due, I have already charged about $300 in new purchases.