Author: Marc Klein
February 13, 2024
Topics:
Credit CardYour credit limit is the total amount you have to spend with your credit card. Learn what happens if you go over it.
From the amount of money you can withdraw at an ATM to how much food you can consume at an all-you-can-eat sushi bar, many things in life have a limit. And credit cards are no different.
A credit limit, or credit line, is the maximum amount of credit an issuer extends to a cardmember. Issuers may use multiple criteria to determine your credit limit, including your credit score, income, credit history, and payment history.
It’s important to understand how your credit card limit works because it tells you how much room you have — or don’t have — to spend with your card. And staying within that limit has a direct line to your overall financial health.
Depending on the credit card company, you may be able to go over your credit card limit. But it’s not always a guarantee.
If your account is in good standing, some issuers may allow you to exceed your limit fee-free. On the other hand, others may allow you to exceed your limit, but for an over-limit fee. It’s important to note that the CARD Act of 2009 states issuers cannot charge an over-limit fee unless the cardholder opts in to allow it. The CARD Act also regulates how much and how often an issuer can charge an over-limit fee.
The real question isn’t so much whether you can go over your credit limit, but what happens if you do.
There’s an old saying, “Just because you can doesn’t mean you should.”
Just because you can touch a hot iron doesn’t mean you should.
Just because you can order Thai food with a 10-out-of-10 spice level doesn’t mean you should.
And — bringing it back to the topic at hand — just because you can go over your credit card limit doesn’t mean you should. Why? Because there are potential consequences for doing so, in addition to the previously mentioned fees.
Whether you’ve opted in for an over-limit fee or not, how much you’ll be allowed to spend in excess of your limit varies from person to person. Credit issuers may weigh several factors to determine the amount, including your payment history. It’s really up to them.
Read your cardmember agreement or contact your credit issuer’s customer service for more information.
This may seem obvious, but one way to prevent going over your credit limit is to always know where it and your balance stand. A great way to do this is to log in to your online account or mobile app, if available. There’s no sense in playing the guessing game when you have the technology available at your fingertips to know the answer within seconds.
Speaking of technology, another way to prevent going over your limit is to set up account alerts to notify you when your balance reaches a specified amount, when a payment is due, or when a charge over a certain amount is made on your card.
And last, but certainly not least, practice healthy financial habits. By following a budget and always making timely payments, you’re not only working toward a strong credit score but also managing your balance appropriately.
If you’re having difficulty staying under your credit limit — or perhaps want more room to spend — you’ve got options.
You can contact your credit issuer and request a credit line increase. If you’ve used your card responsibly and have regularly made timely payments, your issuer may be amenable. Just be aware that this process may include a hard inquiry, which could drop your credit score a few points.
Another option is to apply for a new credit card. Adding another card to your wallet can raise your total credit limit, giving you extra spending power when needed. Just remember that applying for a new card almost always generates a hard pull. Plus, another card means one more account to keep up with and use responsibly.
How much (or how little) credit you have is how much spending power you’ve got at any given time.
And going over your limit can bring some pretty substantial consequences with it. So, knowing your limit at all times — and always keeping your balance below it — is of the utmost importance.
Looking to add a credit card to your wallet? See if you pre-qualify for a Credit One Bank card today, with no impact on your credit score.
About the author:
Marc KleinWith his eyes set on becoming the next great ad man (at least until his comedy writing career took off), Marc earned his journalism degree and went straight into advertising for various gaming and tourism clients. He later expanded his credentials to include public affairs and communications work for several environmental science organizations before returning to his marketing roots. A lifelong scholar with recent studies in strategic communication, Marc enjoys tying humor into his writing and simplifying complex financial subjects into engaging and easy-to-digest content for a wide variety of audiences.
This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.