Credit cards definitely play a valuable place in our lives, especially when it comes to paying for larger purchases and even for getting special offers and benefits. However, these also come with numerous credit card fees.
Sometimes we’re not even aware that we can get out of paying them. One of these pesky fees is the credit card over limit fee. This type of charge can occur when you spend more than the credit limit given by the bank or the credit issuer.
Want to learn how you can effectively avoid paying for this type of fee? Take a look at the guide below to learn more.
What Is an Over Limit Fee?
An over limit fee is a type of charge that is imposed by financial institutions or credit card companies as a penalty for cardholders who go over their credit limit.
Prior to this, there were numerous credit card firms in the field that would instantly decline or stop the transaction if customers had exceeded their purchasing limit.
However, later companies levied penalties instead of declining transactions, which meant customers could continue purchasing. The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act in 2009 changed that.
This industry practice stopped, ending the abusive methods that the industry once observed. Despite this, there are still many companies that continue to give a certain fee for individuals who fail to be mindful of their credit limits.
How to Avoid Credit Limit Fees
Thankfully, there are ways you can avoid these altogether. Below are some tips to help you do so.
Know Your Credit Limit
Before anything else, learning what your credit limit is is essential. This way, you are aware of just how much you can spend. One of the best ways you can do this is by asking your credit card issuer or even checking your account online.
As an extension, why not spend below your means? If your credit card gives you a credit limit of $1,000, make sure to spend only around 10% of this or lower.
This will allow you to keep within your credit limit and will show your responsible spending as a cardholder.
Get Balance Alerts and Notifications
Another helpful tip is to sign up for balance alerts and notifications. Whether through push notifications, text messages, or even emails, getting these alerts will let you know if your credit card balance reaches a certain level.
Check Your Balance Regularly.
This already goes without saying. Checking your balance regularly, even on the daily, allows you to be more mindful not only of your purchases and transactions but also of the available credit you have on hand.
At the same time, checking your balance and your account lets you see the types of transactions being done under your account. This review will give you the peace of mind you need knowing you can also identify fraudulent purchases. Win-win.
Choose Not to Pay Credit Limit Fees
Last but certainly not least is by opting out of the agreement that lets your card be charged over its credit limit. This will prevent your card from being charged with credit card fees that would put your account over the limit.
Once you opt-out of this agreement or permission, any type of transaction or purchase that exceeds your credit card limit will automatically be declined by the bank.
The Bottom Line
Credit limit fees are a pain to contend with. By taking a more mindful approach towards your finances with these tips, you can avoid paying drummed up fees by your issuer.
You can save hundreds of dollars by just becoming more aware.