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Going Over Credit Limit

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This site is all about your credit limit, trying to make it as high as you can, and why that can help to benefit you. However, what happens if you somehow happen to go over your credit limit?

There are many potential bad things that can happen if you do that:

You will likely get charged an overcharge fee, similar to an overdraft fee if you try to write a check or use a debit card for funds that you do not have in your account. Obviously, fees are always a bad thing, especially because you are likely already in a tough financial situation if you are going over your credit limit.

Your limit will likely get decreased in the future. If you have proven yourself not to be trustworthy with a higher credit limit, then a credit card company will probably not feel very secure with you, and your limit could be decreased.

If you do this more than once, you could see your account simply closed. Once again, it comes down to trust, and if a company does not feel that they can trust you will be willing and able to pay your bills, they are not going to trust you charging on their account, for fear that you will declare bankruptcy or use some other method to not pay your bill.

Your interest rate could very well be increased. Companies love any chance they can to charge you as high of a rate as possible, and going over your limit is one thing that could definitely cause them to make you pay a higher interest rate.

Your credit score will be negatively affected. While the over limit fees may not directly impact your score, 30% of your credit score is dependent on the amounts that you owe, so if you owe more money than you even have under your credit limit, that will definitely be a negative mark against you.

There are many negative impacts for you if you exceed your credit limit, so it is something that you should do everything you possibly can to avoid doing it. How can you avoid going over your credit limit?

Keep close tabs on your balance – If you know what your balance and limit is, you should be pretty well aware once you are getting close to reaching your credit limit. If you are, you can appropriately cut back on spending, or make a payment to lower your balance. If you don’t know where you are at in relation to your limit, there is a chance you could accidentally go over.

Make payments on time – One way to quickly get closer to your limit would be to miss payments, so that the balance is always going up, but never going back down. This is just common sense for credit purposes, but always make sure that you are making payments on time. If possible, you should try to do everything you can to pay off the entire balance each month, so that you are not paying exorbitant amounts in interest.

Keep spending in check – If you aren’t spending a ton of money, it will be a lot harder to go over any credit limit, no matter how big or small. Keep your spending in check, and only put on your card what you can pay off by the end of the month. If you can’t, you probably don’t need whatever you are buying.

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2 Responses to “Going Over Credit Limit”

  • I must be missing something.

    In my experience most credit card companies electronically authorize any transaction before completion. If the pending charge takes you over the limit, they decline the transaction.

    How are people even able to charge above their limit given electronic authorizations?

    • Jon says:

      I think it’s like overdrawing your bank account… they won’t let you do it, but they’ll still charge you a fee for it.

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