How to Avoid Fees for Going Over Your Credit Limit

Wondering how to avoid fees for going over your credit limit?. Read on to know just how you can that.

What is a Credit Limit?

A credit limit is a maximum amount your credit card issuer has agreed to let you charge on your credit card account. If this fee is exceeded, it may trigger a credit limit fee.Going Over Your Credit Limit


Fees & Penalties for Going Over Your Credit Limit

If an over-limit fee is charged on your card by your card issuer, the fee can be as much as $35. You can be charged one over-the-limit fee per month for up to three billing cycles if your credit card balance stays over the limit for each billing cycle.

Alternatively, your card issuer can charge additional over the limit fees if you pay the balance down, then exceed your credit limit again or if you get a credit limit increase and exceed the new credit limit.

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Also when you go over your credit limit, your interest rate can increase to the cards default or penalty rate, this in some cases can be as high as 30%. What this means is that the increased interest rate makes it more expensive to carry a credit card balance beyond the grace period. This is because you’ll be charged higher finances charges on your balance.

Finally, your credit score gets the blow. Because 30% of your credit score compares your debt level to your credit limits that are your credit utilization, having an over the limit balance will cost credit score points. You can see how to Check your credit balance here.

How to Avoid Fees for Going Over Your Credit Limit

You can avoid being charged a credit limit fee. All you need to do is take a little action and monitor your account.

Don’t Agree to Credit Limit Fees

You won’t be charged a credit limit fee without your consent. This means your consent is needed before your issuer can charge you a credit limit fee. Thus you can opt-out of the over the limit transactions. Immediately you do, any transaction that would put you over the limit would be declined, and you will not be charged an over-the-limit fee.

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Stay Updated on your Credit Limit

Knowing your credit limit helps you not to go over your limit. To stay updated on your credit limit, check your billing statement, log onto your online account or call your credit card customer service via the number on the back of your credit card. It is advised you monitor your limit regularly because some creditors sometimes raise and lower credit limits.

Sign Up for Balance Alerts

Signing up for balance alerts will enable your financial institution email or text you when your balance is within a certain percentage or dollar amount of your credit limit.

Keep Your Balance Low

A low balance of – 30% of your credit limit or lower gives you access to make purchases without going over your limit and also boosts your credit score.

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Check When Unsure

If you’re unaware of your balance and credit limit, it is advisable you check your available credit before you make any purchase.

What to do if you’re charged a Credit Limit Fee

If you are charged a credit limit fee, you can call your credit card issuer and ask if the fee can be waived.

Secondly, if the fee cannot be waived, you are to pay your balance well below the credit limit to prevent being charged a fee next month. You are to reduce your credit card balance such that interest and fees won’t put you over your credit limit again the next month.