We use cookies to help us improve and protect our services. By continuing to use the site, you agree to our Privacy and Cookies Policy
Close cookies banner
Creditspring logo
how to avoid credit limit fees
how to avoid credit limit fees

Written by:

How To Avoid Credit Limit Fees

If you manage credit cards incorrectly, they can become costly and you could spiral out of control with your debts. In this article, we will look at how you can avoid credit limit fees.
Instagram LinkedIn TikTok Facebook Twitter

Credit cards are a useful tool to assist with managing your finances, and can be a low-cost way to borrow money. 

But if you manage them incorrectly, they can become costly and you could spiral out of control with your debts.

Can I exceed my credit limit?

The short answer is yes. 

However, the exact amount your lender allows you to borrow above the credit limit can vary depending on the agreement with your lender. 

There are factors lenders take into account when determining a buffer.

The amount thereof would be your payment history, bank balances you have, and saving accounts with the lender. Over-the-limit fees can only be charged if the borrower has subscribed to an over-limit protection plan.

Your credit limit is dependent on the following:

  • Financial situation - Lenders will look at your income, bills and debt. You might be asked to provide this information before you can receive credit, as all these factors will be considered to determine if you will receive credit or not.

  • Credit score - Your lender will pull a credit report from any of the major credit bureaus, such as Equifax, Experian, or Transunion. You will be rewarded with higher credit limits if you have a higher credit score and are therefore are a low-risk applicant. 

  • Other factors - General economic conditions and the lender's position will affect the borrower's credit limit.

What happens when you exceed a credit limit?

Lenders can charge an over-the-limit fee if borrowers attempt to exceed their credit limit.

The best option would be to never go over your limit, as this will also affect your credit score negatively due to the over-utilisation of your credit. 

A better option would be to ask your credit provider if they can grant you a credit limit increase. You will first need to find out how much extra credit you will be able to receive before borrowing anything more than you already have.

Remember that your repayment amounts will also increase when your outstanding balance increases. 

When spending over your credit limit, the following can happen:

  • The credit card issuer may charge a fee for going over the limit.

  • It could be harder to obtain credit in the future as your report may be marked.

  • Your provider may increase your APR (Annual Percentage Rate).

  • Any special promotional interest rates could be lost.

How can I avoid going over my credit limit?

Know your credit limit

Knowing what your credit limits are and where your current limit is sitting will give you an indication as to when to slow down using the available credit.

Having knowledge of and keeping an eye on your credit limits can help keep you from going over them.

Your account can always be viewed online to find your billing statement for your credit limit. Also, you can call your lender to find out more about your limit. 

Your balance should be kept minimal

Keeping your balance minimal will assist with improving your credit, and it will help you stay away from the credit limit. If you have more than one credit card, it is good to keep the overall utilisation down by reducing the balances.

Ask to receive notifications for balances

Most lenders will automatically send a text message or email showing you the balance on your credit card. They might also have alert levels showing the percentage of the total limit that has been spent and what is still available.

If you currently do not have a notification system in place, speak to your lender and ask to have monthly balance alerts sent to you.

The safest option would always be to keep a close eye on your finances and know what credit you have available. Managing your finances will keep your credit score high and reflect positively on your credit history.

Review your charges and bills

Try to go over your statement on the same date every month and make a habit of it. If you receive your credit card statement monthly, take some time to review the charges. If anything looks suspicious to you, query it. 

Responsibility and keeping an eye on your finances are crucial to keeping your spending within the limit and keeping up repayment agreements to avoid any type of damage to your credit history.

Join Creditspring
Are you ready to start your journey with Creditspring?
Check your eligibility