Over the limit fees are charges added to a credit card when a borrower exceeds their credit line. This fee is just icing on the cake for borrowers who don’t need it. If you’ve gone over your limit, you have a hefty bill to pay with an additional fee thrown on top.
Over limit fee laws
The Federal Government has laws in place to stop over the limit fees when they’re unjustified. All borrowers must agree to allow their credit card to process charges above their credit limit. If credit card users don’t agree, then the credit card company has to deny a transaction that would push the borrower over their credit limit.
By default, most credit card companies slip this agreement into the terms of service for a credit card. If you have a card, you have agreed to allow charges that would push your balance above the limit.
Reason #435342 why you should always understand credit card offers before you sign the dotted line!
How to avoid over the limit fees
There are a few ways to make sure you don’t pay an over the limit fee on your credit card:
- Change the Terms – You can request that your credit card company does not process your transactions that would exceed your credit limit. A quick phone call and follow-up letter should suffice for this change, assuming the credit card company agrees. Most will do so.
- Credit Limit Increase – A credit limit increase is a great way to make sure you don’t exceed your credit line. You can ask for a credit limit increase as often as twice per year, or every six months. See our guide on how to ask for a credit card increase.
- Online Services – Use the online features available on your credit card’s website to keep on top of your balances. Your credit card company will report your balance as of the last statement, as well as any recent transaction activity. In general, the company will report all transactions excluding those made within the past 48-72 hours.
- Get balance alerts – Balance alerts from your credit card companies will alert you when your balance exceeds a certain amount or percentage of your credit line. Balance alerts help you avoid over the limit fees by notifying you of high balances by both phone and email. Third-party services like Mint.com also provide this feature to members.
- Avoid Pay at the Pump – Gas stations frequently charge $1 to a credit card to make sure the card works. This $1 charge appears immediately. However, the remaining charge exceeding this amount isn’t added for as many as 2-3 days. In that time, you might make other charges to push you close to your credit line. Once the gas station charges are fully reflected on your bill, you might find that you’re over your credit line.
The opposite is also true – gas stations will charge $50 or $100 to a card to validate that you can afford your pay at the pump purchase. This portion of your credit line is “set aside” so to speak, until the actual purchase is validated. Thus, a $20 tank of gas might knock $100 off your available credit until the amount is replaced with the correct amount.
Over the limit fee charges
Over the limit fees vary by credit card and credit card issuer, but are usually set to $39 per charge over the limit. Thus, if you were to make several charges above the credit limit on your card, you would have several $39 fees to repay.
Photo by: Joe Shlabotnik
