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How to Avoid Charging over the Credit Limit

By George Hauser
Published: Wednesday, November 11th, 2009

You could be one of the many people who bathe in the benefits of a credit card. It is one thing that comes in handy when you need to have a product or a service given the absence of cash at hand. In fact, the number of credit card providers is increasing because of the demands of great credit card services.

Credit cards have different benefits for different people. These depend on their financial needs. Though most credit score tips always center on sticking with installment credit, there are still those who believe in the advantages of credit cards. These credit score tips do not actually pose credit cards as the reason for financial problems. Like in any type of credit, responsible money management always means a lot. 

In fact, it is better for your credit score if you use both revolving and installment credits. But when you would prefer using your credit card in making purchases, remember what credit score tips say that you should keep your financial transactions under the credit limit. 

Credit limit

Your credit limit is the maximum amount you can charge without facing penalty. If you charge more than your credit limit, there are added costs. Most creditors will want you to charge beyond this limit, that’s why when you apply for a credit card, go for the one with a high credit limit. 

When you charge more than the credit limit, you could be paying almost $40 each month you exceed. You can also expect your interest rate to increase. Finally, your credit score suffers because of the over-the-limit balance report which will definitely pull your score. 

How to avoid over the credit limit charges

First, most credit score tips will tell you to remember what your credit limit is. If you don’t know your credit limit, you could be carried away in charging which then has disastrous repercussions. You can find out your credit limit upon application. Go through your billing statement, your credit limit is most commonly indicated there. Creditors also raise or lower credit limits, so it’s best to be updated. 

Second, don’t wait for your creditors to stop you from charging. Remember that they make a profit from how you use your credit card. If you go beyond the limit, they can get more money from you. Responsibility mentioned in many credit score tips includes stopping yourself from charging when you know you are almost the credit limit. 

Third, enroll in balance alerts. Though not all credit card providers have balance alerts, it would be best to inquire about this service and apply for it if possible. This service updates cardholders by notifying them when their balances are within a certain percentage or dollar amount of the credit limit. 

Fourth, keep your balances low. If you have low balances, you have more room to make purchases below the credit limit. Low balances that are 30% below the credit limit are also good for your credit score. If you are given a limit of $1000, a good balance to keep is $300. 

Finally, check your credit limit and your balances if you are not aware. You should not make purchases when you are not sure about your credit card’s status. You can call your provider’s customer service department.

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