A credit card allows individuals to make purchases on credit up to a preset limit. Many customers might not know they can use their credit cards even after exhausting the limit; it is the ‘over limit’ facility. And upon using the card over the limit, the bank charges an additional fee on your credit card bill. Learn more about this below.
What is an Over Limit Charge?
A credit card user can use their cards over the prescribed limit; it is up to them whether to opt in or neglect.
If the customer enables this option and exceeds the credit limit, they need to pay additional fees per the bank’s policy. On the contrary, transactions that exceed the credit card limit get declined automatically when the option is not enabled. This way, credit card users can save themselves from sudden and additional charges on the credit card statement.
Ways to Avoid Credit Card Over-limit Charges
1. Understand your Card
Extra charges on a credit card may surprise customers. So do read the terms and conditions while applying for a credit card. This way, you can decide on a card which suits your financial needs and monthly budget.
2. Be Aware of Your Credit Limit
Credit card users need to have responsible financial behaviour. It includes being aware of the total and available credit limit. Shopping without awareness of credit card limits can lead to overspending as there is a high chance that the user will exceed the set credit limit.
You can check the credit card limit by logging in to your account online or calling customer care. This way, you can monitor credit limits frequently and avoid paying additional charges.
You can subscribe to bank alerts to keep up with credit card transactions. Using this feature, you’ll get email and text messages on your registered mobile or email.
3. Splitting the Bill
Customers can make transactions on different cards if the purchase exceeds the set credit card limit. You can save on the additional charge by splitting the bill across multiple credit cards. It is advised to use the right credit card as per the specific purchase; this way, consumers have the advantage of significant rewards and benefits. Additionally, by managing their credit card meticulously, such as paying bills on time and keeping balances low, consumers can improve their credit scores and qualify for lower interest rates on loans and other financial products. With lifetime free credit cards, customers save on credit costs by managing their bills on time as there are no annual fees.
4. Good Account Standing to Reduce Fee
Individuals can approach the credit provider to request to waive or reduce the credit card fee. They may consider the request if the customer keeps their account in good financial standing.
4. Increase Credit Card Limit
If your spending rises, it is better to upsurge your credit card limit to avoid over-limit charges. First, reassess the usage and apply to increase the credit limit. You’ll have a longer credit limit if the bank accepts your request.
Also Read: The Average Credit Limit for Credit Card in India
Ways to Improve Credit Card Limit
Below are the tips you can follow –
Improve Credit Score
A credit score is a key parameter to assign limits on credit cards. So maintain a high credit score to increase your credit card limit. For this, customers should pay their credit card dues on time. And the longer the credit history, the better it is to improve credit cibil score.
Update Information with the Bank
Sometimes banks need updates regarding the financial status of the customer. The updated financial information can help meet the eligibility for a higher credit limit. Suppose a customer gets a significant salary hike. They can maintain their savings accounts with a good amount of funds and show an additional source of income to the bank to increase their credit limit. Generally, banks automatically increase the credit limit on their customer’s credit cards, depending on their creditworthiness.
Thus, credit cards can be an effective financial tool for consumers when used responsibly. Understanding financial needs and taking steps to increase your credit limit can help individuals evade credit card over-limit costs.