If you have a credit card, then you would know what a limit is. A credit card limit is the maximum sum that you can use without being charged a penalty. Although credit companies give you this limit, most of them actually let you pass that limit, but they will charge you an extra fee for it. You may think that this is OK at first, but these extra fees will actually cost you more than what you expect. Usually, over-the-limit fees start at around $39. Not only will you be charged an extra fee, the card’s interest rate may also increase. Going over the limit will also have a negative impact on your credit score, which will come into play when making loans in the future. Here are a few tips on how you can avoid going over the credit limit of your card. Never opt-in The credit card company can’t charge you an over-the-limit fee unless you opted-in for it. If you did not call your credit card provider and request for an over the limit transactions processed, these transactions will get declined and you will not be charged of any over the limit fees.
Know the card’s limit One of the biggest mistakes people make is that they do not remember their credit card’s limits. Having no idea what your card’s limit is, is definitely a debt collection lawsuit waiting to happen. Look for your card’s limit on your monthly statement. At times, creditors actually lower or raise these limits, so it’s really best to keep a close eye on the limit regularly. You can also call their customer service hotline to ask for your updated credit limit. Sign up for balance alerts Many credit companies offer balance alert services, which involves them sending messages and alerts to cardholders who are close to their limits or have reached a certain balance with their credit. If your card provider offers this feature, it’s going to be a big help if you sign up. Always maintain a low balance As much as possible, keep your balance low. This gives you plenty of room to use your card without having to go over you credit limit. Keeping a low balance will also have a good impact on your credit scores and keep you away from a debt collection lawsuit. Try to keep your balance lower than 30 percent of your card’s limit.