Can you use a credit card beyond its approved limit? This is how the overdraft facility works

A credit card is usually a credit limit This puts a limit on its use. This means: credit card border: ₹After 10 lakhs card user can spend ₹10 lakhs. But what if you need more than one expense in a particular situation? ₹12 lakhs. Fortunately, this is not allowed. You need to enable it first credit limit Using your credit card beyond its limit.

There are some predefined rules regarding using a credit card beyond its limit. The Reserve Bank of India (RBI) has mandated the use of credit cards beyond specified limits. approved credit limit Requires prior express consent of the cardholder. This is part of the fraud minimization mechanism.

“In addition, the card holder will be given the option to enable or disable the over-limit option through the transaction control mechanism on the card issuer’s platforms such as internet, mobile banking or other suitable media. Unless explicit consent is obtained from the card holder, no over-limit facility can be provided. or over-limit fees cannot be charged.” RBI’s Main Direction on credit cards (Dated April 21, 2022 and updated March 7, 2024).

Credit card versus credit card

Banks can even issue cards for other credit accounts such as overdraft accounts and cash loans. RBI’s guidelines have made it possible to issue various types of credit cards that can be customized to provide access to available limits on different credit accounts.

For example, a card user People who benefit from a bank overdraft facility may be issued a type of credit card to access the funds covered by this facility. The terms of use of this credit card (interest charged, repayment plan, penalty, cash withdrawal limit) will be in accordance with the terms and conditions applicable to the overdraft account.

Let’s say Mr. ₹7 lakhs by the bank. In this case, the bank may issue Mr. The card limit and other conditions of this card will be the same as the overdraft account.

(Note: Using a credit card carries its own risks)