Can You Go Over Your Credit Limit?
If your credit card comes with a credit limit, the maximum amount you’re “allowed” to charge on your credit card, you’ve probably wondered if it’s possible to go over your credit limit. Maybe you want to make a purchase larger than your available credit. Or maybe you’re just wondering what will happen if you swipe your credit card for a purchase bigger than your credit limit. Whether you can go over your credit limit is actually up to you.
You Can Opt Out of Over Limit Charges
Credit card issuers are required to give you the option to have transactions that would put you over the limit declined. You can opt in or opt out of over limit transactions at any time.
You may opt in to over limit charges to avoid the embarrassment of having your credit card declined or simply for the convenience of being able to go over your credit limit. If you’ve opted in, it means you've chosen to be able to go over your credit limit. Purchases that exceed your available credit will usually go through, but typically only by a certain amount preset by your credit card issuer.
Opting out, on the other hand, would cause any transaction that would exceed your credit limit to be declined. This can save you from any credit limit fees your credit card issuer charges. It also keeps you from going over your limit and creating more debt than you can afford to repay.
Once your balance is already over your credit limit, additional transactions may be declined since you don't have any additional available credit. This can happen even if you’ve opted-in.
No More Over Limit Fees?
Many credit cards have eliminated credit limit fees that would be charged if you go over your credit limit. Credit card issuers that do charge fees have to follow certain rules.
If your card issuer does charge a fee, the fee can’t exceed the amount that you’ve gone over your limit. For example, if you go over your credit limit by $15, the maximum fee you can be charged is $15. Check your credit card terms or call the card's customer service to find out whether you'll be charged a fee for going over the limit and the amount of the fee you'll be charged.
Even if your credit card issuer doesn’t charge a fee, there may be other penalties for going over your credit limit. Going over your credit limit may trigger the penalty rate, the highest interest rate charged on your credit card. The credit card issuer may raise your minimum payment to compensate for the amount that you’ve exceeded your credit limit.
Going over your credit limit is a sign that you’re not able to manage your credit. Even though they may permit you to exceed your limit, credit card issuers may view it unfavorably. Some credit card issuers may even lower your credit limit or close your credit card account.
Impact of Going Over Your Credit Limit
Your credit score could be impacted if your credit card balance is over the limit when your creditor reports your account to the credit bureau, which is typically on your account statement closing date. An over-the-limit credit card balance increases your credit utilization and could lower your credit score. You can avoid having the high utilization reported to the three national credit bureaus (Equifax, Experian and TransUnion) by paying your balance down before your account statement closes.
If you need to make a purchase that would exceed your available credit, first ask your credit card issuer for a credit limit increase. You can also try splitting the transaction, paying for a portion on your credit card and the remainder in cash.
Consumer Financial Protection Bureau. "Comment for 1026.56 - Requirements for Over-the-Limit Transactions: 56 (g) Continuing Right To Opt In or Revoke Opt-In." Accessed Feb. 11, 2020.
Consumer Financial Protection Bureau. "Comment for 1026.56 - Requirements for Over-the-Limit Transactions: (a) Definition and (b) Opt-in Requirement." Accessed Feb. 11, 2020.
Consumer Financial Protection Bureau. "I Went Over My Credit Limit and I Was Charged an Overlimit Fee. What Can I Do?" Accessed Feb. 11, 2020.
Office of the Comptroller of the Currency. "Can the Bank Charge Me an Over the Limit Fee?" Accessed Feb. 11, 2020.
Federal Trade Commission. "Credit Card Accountability Responsibility and Disclosure Act of 2009," Page 7. Accessed Feb. 11, 2020.
National Credit Union Administration. "Understand Your Credit Card Statement - 5. Notice of Changes to Your Interest Rates." Accessed Feb. 11, 2020.
Experian. "Going Over the Limit On Your Credit Card." Accessed Feb. 11, 2020.
Experian. "What Affects Your Credit Scores? - What Can Hurt Your Credit Scores." Accessed Feb. 11, 2020.