Many credit card users unknowingly incur over-limit fees due to a lack of awareness. However, with a little caution, you can easily avoid these charges.
What Is an Over Limit Fee?
An over-limit fee is a penalty charged when a cardholder exceeds the maximum credit limit authorized by the card issuer. If a credit card goes over its assigned limit, the issuing bank or financial institution may impose a penalty fee, which varies depending on the issuer’s policies. Generally, when a card exceeds its limit, the cardholder is required to pay both the over-limit fee and the total outstanding balance to the issuing bank or financial institution.
How to Avoid Over-Limit Fees
Preventing over-limit fees is simple if you follow a few precautions while using your credit card:
1. Never exceed your total credit limit.
2. Always keep sufficient available balance before making new purchases.
3. Ensure your total outstanding balance, including interest and other charges, does not exceed your credit limit when your next bill is generated. If necessary, maintain an extra cushion within your credit limit.
4. If you have high spending in a billing cycle and risk exceeding your limit, make an early payment before your bill is generated to stay within the limit.
By staying mindful of these points, you can avoid unnecessary fees and manage your credit card more effectively.
Thank you for your attention!