You've hit your usage limit
Your Cursor plan's included frontier-model usage for the billing month is used up. Cursor then blocks or downgrades premium requests until the cycle resets — unless you enable usage-based pricing or bring your own API key.
Agent mode is the usage killer: every tool call resends the workspace context. If you live in agent mode, an allowance-based plan will always run out before the month does.
Cursor's “Override OpenAI Base URL” setting accepts any OpenAI-compatible endpoint. Point it at Standard Compute (base URL https://api.stdcmpt.com/v1, model = standardcompute) and chat/agent usage runs on a flat monthly price instead of an allowance — no mid-month wall. See the Cursor setup guide under /integrations/cursor.
Yes — included usage resets with your billing cycle. Usage-based pricing (if enabled) simply bills for what you use past the allowance.
Only by enabling usage-based pricing, or by plugging a custom OpenAI-compatible base URL + key into Cursor so those requests bill (or don't) through your own provider instead.