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Gone over Your Credit Card Limit? Don’t Panic, There’s a Way Out

Credit cards are an important financial tool that can help us meet financial liabilities. From online shopping to online payment, a lot can be done via a credit card. However, one should use a credit card wisely to avoid overspending and unwanted debt. You should always spend your credit card limit as per your repayment capacity. When you pay credit card bill online, the entire spending is calculated even if you have stepped over the credit limit. Most credit cards users don’t know about what happens when you overspend. Continue reading to know what happens when you go over your credit card limit.

How do credit card users spend more than the available limit?

When you get a credit card, you cannot get over the credit limit by default. Most credit card providers do not allow you to spend more than the available credit limit by default. How do users spend more than the available credit limit? Well, there is a choice that is offered by your credit card provider. You have to opt-in separately for going above the credit card limit. An over-the-limit arrangement form will be provided by your credit card provider. Just by applying for a credit card, you don’t get to spend over the credit limit. You have to fill a separate form if you want to go above the credit card limit.

One should know that not all credit card providers allow users to go above the credit card limit. Some banks do not offer over-the-limit arrangements to users. The over-the-limit/overdraft amount is decided by your credit card provider. As per the laws, a credit card provider cannot offer you a higher credit limit if you choose the over-the-limit arrangement. The credit card provider will confirm multiple times if you choose an over-the-limit arrangement.

Is there a way out from the over-the-limit arrangement?

You can ask your credit card provider to cancel the over-the-limit arrangement anytime. However, you cannot escape the previous charges for going over the credit card limit. Many credit card providers allow users to apply for ending their over-the-limit arrangement via the official website or mobile application. If you cannot cancel your over-the-limit arrangement yourselves, you can simply give a call to your credit card provider. After asking a few questions, the limit of credit cards will be fixed. Now, if you want to go over the limit, the transaction will be immediately declined. You will be informed that your credit card transaction is going over the limit and had to be cancelled.

There is no need to panic if you receive a notification of going over the limit. If you haven’t signed an over-the-limit arrangement in the past, ask your credit card provider about it. The credit card provider may allow you to go over the limit by default. You may simply ask the credit card provider to end your over-the-limit arrangement and it will be followed.

What am I charged after going above the credit card limit?

A minimum chargeable amount is set by the credit card provider for going above the limit of credit card. If you fail to pay the minimum amount, you will have to face high penalty charges. Even if you have gone over the credit card limit, try to pay the extra charges as soon as possible. Penalty fees are decided by the credit card provider based on inflation and other factors. Some credit card providers also charge a recurring fee for the over-the-limit arrangement. You may have to pay small periodic fees just for using over-the-limit arrangements.

How to avoid over the limit charges on a credit card?

Don’t opt-in for an over-the-limit arrangement if you want to avoid extra charges. You should know the limit of credit cards to avoid overspending. No one else is going to take responsibility for your credit card spending. Be a responsible credit card user and know how much you can spend. The credit utilisation ratio plays a role in determining your credit score. If you exhaust your credit limit and go over the limit, your credit score might take a hit. Do not spend more than 50% of your credit limit for a better utilisation ratio. Start using your credit card responsibly in 2022!

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