How should a furnisher report a credit card that has no preset spending limit and allows the consumer to spend past the stated credit limit?
Flexible spending credit cards are now common in premium and charge-hybrid card products. They’re built to give high-spend consumers room past a traditional limit, but that flexibility makes credit reporting harder. Fields that are simple on a standard revolving card, such as Credit Limit, Scheduled Monthly Payment Amount and Amount Past Due, now have to cover two balances: a revolving portion and a “flexible” portion above the limit. Metro 2 gives these products their own Account Type Code and field rules so data users can see what the consumer actually owes and how they are paying.
Definitions and context
Metro 2 defines a flexible spending credit card as a card with no preset spending limit. The card has a Credit Limit, but its terms let the consumer go over that amount. These products usually follow one of two structures:
- Revolving and open terms: Balances up to the credit limit revolve with a percentage-based minimum payment. Any balance above the limit must be paid in full each month.
- Revolving terms only: The consumer can go over the credit limit with no penalties or added fees. The minimum payment is a percentage of the total balance, including the amount over the limit.
Both structures are reported under the same Account Type Code. The difference shows up in how the payment and past due fields are calculated.
Step-by-step reporting standards
Report these Base Segment fields for flexible spending credit cards:
- Account Type Code (Field 9): Report 0G (Flexible Spending Credit Card). This tells data users not to read a balance above the limit as an over-limit condition.
- Portfolio Type (Field 8): Report R (Revolving).
- Credit Limit (Field 11): Report the valid credit limit for the revolving portion of the account. Do not inflate this figure to cover the flexible spending capacity.
- Highest Credit or Original Loan Amount (Field 12): Report the highest amount of credit the consumer has used.
- Terms Duration (Field 13): Report REV.
- Scheduled Monthly Payment Amount (Field 15): Report either:
- the minimum due on the revolving balance plus the total flexible amount, if the flexible amount is due in full, or
- the minimum due based on the total outstanding balance, if the whole balance revolves.
- Current Balance (Field 21): Report the total outstanding balance, including both revolving and flexible amounts.
- Amount Past Due (Field 22): Report the part of the Scheduled Monthly Payment Amount, based on both the revolving and flexible amounts, that is 30 days or more past the due date. Do not include the current month’s amount due.
Worked examples
Example 1: Revolving and open terms
A consumer has a $10,000 revolving credit limit with a 3% minimum payment. Any balance above $10,000 must be paid in full each month. The current balance is $12,000.
- Revolving minimum: 3% of $10,000 = $300
- Flexible amount due in full: $2,000
- Scheduled Monthly Payment Amount = $2,300
- Current Balance = $12,000 | Credit Limit = $10,000
Example 2: Revolving terms only
A consumer has a $10,000 credit limit and can go over it with no penalty. The minimum due is 3% of the total balance. The current balance is $12,000.
- Scheduled Monthly Payment Amount = $360 (3% of $12,000)
- Current Balance = $12,000 | Credit Limit = $10,000
The cards in these examples have the same limit and the same balance, but their scheduled payments differ by almost $2,000. That’s why reporting the correct payment structure matters.
Compliance requirements
Under the FCRA and the furnisher accuracy and integrity rules, a furnisher must report information that reflects the account’s terms, the consumer’s liability and the consumer’s performance. The 2010 furnisher rules also specifically expect the credit limit to be reported when the furnisher has it. Common mistakes with flexible spending cards include:
- Using a standard revolving Account Type Code: Without 0G, a balance above the limit can look like an over-limit or overextended account.
- Reporting an inflated or zero Credit Limit: Report the actual revolving limit. Zero-filling it or reporting an artificial “spending power” figure hurts accuracy.
- Understating the Scheduled Monthly Payment Amount: On open-term structures, leaving out the flexible amount due in full understates the consumer’s monthly obligation. Lenders rely on that figure for debt-to-income analysis.
- Putting the current month’s payment into Amount Past Due: Only amounts 30 or more days past the due date belong in this field. Including the current amount due makes delinquency look worse than it is.
Impact on consumers
Reporting errors on flexible spending cards affect consumers directly. Without the 0G code, scoring models and underwriters may treat a $12,000 balance on a $10,000 limit as 120% utilization, which can lower scores even when the consumer is paying in full. Understating the scheduled payment can lead a lender to approve credit the consumer can’t afford. Overstating past due amounts can produce derogatory reporting that isn’t justified. Accurate reporting shows these consumers as they are: often high-spend borrowers who pay reliably.
Conclusion
To report flexible spending credit cards correctly, use Account Type 0G and Portfolio Type R, report the actual revolving credit limit, and report a Current Balance that includes both revolving and flexible amounts. The Scheduled Monthly Payment Amount has to match the product’s structure, so include the flexible amount when it is due in full. Amount Past Due should cover only amounts 30 or more days past due. Getting these fields right protects utilization accuracy, gives lenders better debt-to-income data and reduces disputes.