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Can You Go Over Your Credit Card Limit?


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Have you ever wondered if you can go over your credit card limit? It depends. Sometimes you can go slightly over your limit. Other times, your card will decline if you attempt to make a purchase that will put you over your credit limit. 

Whether you’re facing an unexpected expense or want to make a big purchase on credit, it’s important to understand the implications of exceeding your credit card limit. In this article, we unpack how credit card limits work, what happens when you go over the limit, and how to manage your credit card to ensure you don’t exceed the limit. 

If you’re ready to learn how credit card limits work and how to avoid exceeding them, we’ve got you covered!

How Do Credit Card Limits Work?

Credit limits are the maximum amount of money you can charge on your credit card. This limit is determined by your credit history, income, and overall creditworthiness. The more exclusive a credit card, the higher your credit limit.

What Happens If You Exceed Your Credit Limit?

It’s generally never a good idea to overcharge or exceed the limits of your credit card, and if you do so, you could face several drawbacks:

  • Denied transactions: In most cases, a large purchase that puts you over the credit limit will be denied. This can lead to potentially embarrassing situations.
  • Fees: If you max out your credit card, you may pay an over-the-limit fee. You generally do not pay higher fees than the amount you exceeded your limit, and the first fee is generally not more than $27. For the most part, over-the-limit fees are not common.
  • Penalties: If you repeatedly go over the limit, you may pay higher interest rates, get a reduced credit limit, get an earlier payment due date, or have your card cancelled altogether.
  • Lowered credit score: Perhaps worst of all, exceeding your credit limit can negatively impact your credit score and finances long-term.

Overall, it’s better to avoid going over your credit card limit rather than deal with the consequences afterwards.

Why Does Going Over The Credit Card Limit Affect Your Credit Score?

Your credit score is commonly used as a measure of creditworthiness and can determine whether or not you get a loan or mortgage agreement later on. Therefore, it’s vital to avoid any negative changes to your score. 

But why does going over your credit limit limit affect your credit score? It has to do with credit utilization. 

Your credit utilization rate is the ratio of how much credit you have compared to how much credit you use. The less credit you use, the more reliable you seem to lenders. If you rely too heavily on credit, it can be seen as a risk to lenders and can lead to a higher chance of defaulting on your payments. 

If you regularly exceed your credit limit, you are using much more credit than is considered safe. This then pushes up your credit utilization and lowers your credit score.

How To Avoid Going Over Your Credit Card Limit

Here are some tips to help you stay within your credit card limit:

  • Monitor your spending: Regularly review your credit card transactions to ensure you know your current balance and available credit. Many credit card issuers provide online or mobile banking platforms that make it easy to track your spending.
  • Set a budget: Establish a monthly budget that includes your credit card expenses. This will help you plan your spending and ensure you don’t exceed your credit card limit.
  • Avoid impulse purchases: Impulse purchases can quickly add up and push you over your credit card limit.
  • Aim to keep your credit utilization ratio below 30%: This is the recommended ratio to keep your credit score at optimal levels.
  • Pay your balance in full: This will prevent you from going over your credit card limit and help you avoid paying interest on your purchases.

Set up a balance alert: This will warn you if you’re close to exceeding your credit limit.

What To Do If You Go Over Your Credit Card Limit

If, despite your best attempts, you manage to go over your credit card limit – don’t panic. Follow the following steps to minimize the damage to your credit score:

  • Contact your credit card issuer: Reach out to your credit card issuer and explain the situation. They may be willing to waive the over-limit fee or work out a payment plan with you.
  • Make a payment as soon as possible: If you have the means to do so, make a payment to reduce your credit card balance as soon as possible. This will help bring your credit utilization ratio back within a manageable range.
  • Create a repayment plan: If you’re unable to pay off the excess balance immediately, create a repayment plan to gradually pay it off. This will help you avoid incurring additional fees and penalties.
  • Negotiate for a higher credit limit: You may be able to negotiate with your credit card issuer to increase your credit limit temporarily. Call your customer support and explain the situation, highlight previous responsible credit behaviour, and offer to provide additional information if needed.

While it’s ideal to avoid this situation, knowing what to do if you do exceed your limit can be helpful to mitigate the worst of the consequences of maxing out your credit card.

How To Get A Higher Credit Limit To Avoid Exceeding It

If you find yourself frequently approaching or exceeding your credit card limit, it may be time to explore options for increasing your credit card limit. Here are a few potential options:

  • Request a limit increase: Rather than settle for a temporary increase, try to negotiate for a permanent limit increase. Ensure your payment history, income and creditworthiness will justify such a change.
  • Apply for a new credit card: If your credit card issuer is unwilling to increase your credit limit, consider applying for a new credit card with a higher limit. However, be cautious when applying for new credit, as it can temporarily lower your credit score.

Pay down your balances: By consistently paying down your credit card balances and demonstrating responsible credit behaviour, you may become eligible for a credit limit increase over time.

Final Thoughts

While it is possible to exceed your credit card limit, we highly recommend not doing this. There are several steps you can take to ensure you stay well within your credit card limits, such as setting up balance alerts, sticking to a budget, and setting a strict limit on impulse purchases. 

Exceeding your credit card limit can hurt your credit score, which can get in the way of your long-term financial goals. So remember to stay vigilant, and if you think you’re going to exceed your credit card limit, use another payment method instead. Good luck!

Author Bio

Mohamed Konate

Mohamed Konate is a personal finance expert, blogger, and marketing consultant based out of Toronto. He is a former financial services professional who worked for many years at major Canadian financial institutions where he managed the marketing strategy around various financial products ranging from credit cards to lines of credit. Mohamed is passionate about personal finance and holds a Bachelor in Business Administration from the University of Quebec (Montreal) and a Master in International Business from the University of Sherbrooke (Quebec).He is also the author of the Canadian Credit Card Guidebook.

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