It’s easy to accidentally go over your credit limit. Whether you’re making a large purchase or you’ve been using your card more frequently than usual, there are a number of ways that you can end up exceeding your credit limit. And while going over your credit limit may not seem like a big deal, it can actually have a significant impact on your finances. Here’s what you need to know about accidentally going over your credit limit and how to avoid it.
What Happens When You Go Over Your Credit Limit?
There are a couple of things that can happen if you accidentally go over your credit limit. First, your card issuer may charge you an over-limit fee. This fee is typically around $35, although it can vary depending on your card issuer.
Second, going over your credit limit can negatively impact your credit score. This is because your credit utilization—which is the amount of debt you have compared to your credit limit—will increase if you go over your credit limit, and high credit utilization is one of the factors that makes up a good credit score. Therefore, it’s in your best interest to avoid going over your credit limit.
How to Avoid Going Over Your Credit Limit
There are a few things that you can do to avoid going over your credit limit. First, make sure that you keep track of your spending. This means knowing how much money you have available to spend and staying within that budget. You can do this by using cash or debit instead of credit every time you make a purchase, or by setting up alerts with your bank so that you know when you’re close to reaching your credit limit.
Additionally, it’s important to check your statement on a regular basis so that you can keep track of where your money is going and identify any unexpected charges. Finally, if you’re planning on making a large purchase, be sure to coordinate with your card issuer in advance so that they know to expect the transaction and won’t lock or cancel your card when it goes through.
Conclusion:
Going over your credit limit can have consequences like fees and damage to your credit score avoid it by knowing how much money you have available to spend (i.e., stick to tracking spending/budgets), set up Purchase alerts with issuers, checking statements regularly for fraudulent activity and by coordinating ahead of time with issuers for larger purchases.
