Methods and apparatus for determining credit limit extensions for financial accounts

#The present invention relates to methods and apparatus for determining allowable credit limit extensions for account holders of financial products and accounts and, more particularly, embodiments of the present invention relate to methods, means, apparatus, and computer program code for determining if an increase of an account holder's credit limit associated with a financial product or account can be authorized during one or more transactions.

#Generally, financial products such as credit cards have credit or other limits associated with them. That is, a person using a credit card may not be allowed to exceed a limit associated with the credit card. When the person uses the credit at a merchant to make a purchase as part of a transaction, the merchant may request authorization to allow use of the credit card from the issuer of the credit card. If the person tries to use the credit card in a way that might exceed the limit associated with the credit card, the merchant will receive an indication from the credit card issuer that use of the credit card in the purchase or transaction is not authorized.

#In some situations, however, the merchant and/or the credit card issuer may want to allow certain people to exceed credit limits associated with their credit cards. Unfortunately, extending or providing credit limit extensions to people increases the risk of losses to the credit card issuer when some or all of the people fail to make payments towards reducing their credit card balances when due. In addition, such losses may offset potential revenue gains generated from allowing other individuals to exceed their credit limits during transactions. Furthermore, one business objective for the card issuer may require that the card issuer deny a request from a merchant to allow an account holder to exceed the account holder's credit card limit while a different business objective for the card issuer may allow the card issuer to approve the request. However, the card issuer is not able to make such decisions on a case-by-case basis when the card issuer has one or more global objectives regarding all individuals that may request extensions to their credit card limits during one or more transactions.

#The accompanying drawings, which are incorporated in and form a part of the specification, illustrate the preferred embodiments of the present invention, and together with the descriptions serve to explain the principles of the invention.

#FIG. 1 is a flowchart of a first embodiment of a method in accordance with the present invention;

#FIG. 2 is an illustration of one example segmentation of account holders that may be used with the method of FIG. 1;

#Applicants have recognized that there is a need for systems, computer code, means and methods that facilitate determining credit limit extensions for account holders (also referred to as card holders in some embodiments) associated with credit cards or other financial products or accounts and/or that facilitate when a credit limit extension should be provided to an account holder of a financial product or account during one or more transactions. In addition, applicants have recognized that there is a need for systems, computer code, means, and methods that facilitate determining sets of credit limit extensions for segments of account holders of a financial product or account.

#As one example, an account holder may have an associated credit card that the account holder wishes to use at a merchant to make a purchase. The credit card may have an associated credit limit of one thousand dollars. During the transaction, the merchant may seek authorization from a credit card issuer that allows the account holder to make the purchase using the credit card. Typically, the credit card issuer will not authorize use of the credit card to make a purchase during a transaction that will make the account holder's credit card balance be more than one thousand dollars. In some cases, however, the merchant and/or the credit card issuer may want to allow the account holder to use the credit card in the transaction, even though the account holder will exceed the credit card limit associated with the credit card. For example, if the account holder consistently pays down the balance on the credit card or if the account holder has never missed making a payment due on a credit card, the merchant and/or the card issuer may be willing to risk increasing or otherwise extending the account holder's credit card limit for the given transaction. Such an increase or credit limit extension may be allowed for the current transaction only, may be allowed for a temporary period of time, or may be permanent, thereby effectively increasing the account holder's credit limit. In some embodiments, an account holder's credit limit may change relatively infrequently while a pad percentage associated with the account holder may change more frequently depending.

#For purposes of discussion, but not limitation, of the present invention, a credit limit extension for an account holder refers to an extension provided to the account holder over the account holder's current credit limit. However, providing a credit limit extension to the account holder for purposes of one or more transactions does not necessarily equate to a change in the account holder's associated credit limit, even though the account holder may be allowed to exceed the credit limit as the result of, or during, one or more transactions. For example, an account holder may have a two thousand dollar credit limit associated with a credit card. Suppose that the account holder's current balance for the credit card is $1,500 and the account holder wants to purchase a product for $700 in a transaction using the credit card. Typically, the account holder would not be allowed to make such a purchase with the credit card since in order to do so the account holder would need a two hundred dollar credit limit extension to allow the account holder to exceed the two thousand dollar credit limit by two hundred dollars. However, as discussed above, if the account holder is a good customer, the credit card issuer may authorize the transaction and grant the account holder a two hundred dollar credit limit extension. As a result, the account holder now has a pad percentage of one hundred and ten percent (i.e., 100%×$2,200/$2000). A pad percentage for an account holder or an account is computed relative to the account holder's or the account's current credit limit. Thus, a pad percentage of one hundred percent indicates that an account holder has not been granted any credit limit extension while a pad percentage of ten percent indicates that the account holder can receive a credit limit extension equal to ten percent of the account holder's current credit limit. A pad percentage of less than one hundred percent means that the account holder cannot use all of the associated credit limit until the pad percentage is increased to one hundred percent or more. While the present invention will be discussed primarily in reference to credit limit extensions, in some embodiments an account holder may have a credit limit limitation. Thus, the account holder may have a pad percentage less than one hundred percent or reduced access to full use of the credit limit associated with the account holder.