If, like many other consumers, you juggle more than one credit card, you might find it difficult to keep track of each one’s credit limit. So, what happens if you end up spending more than the credit limit you have available on any of your cards?
The Credit CARD Act of 2009 provided consumer protections that weren’t available prior to the legislation, including for over-the-limit transactions. And the Consumer Financial Protection Bureau has spelled out what requirements must be met for a card issuer to OK your over-limit transaction and charge you for it.
Can you go over your credit limit?
The default position is that you cannot go over your credit limit, and if you accidentally charge your credit card over the credit limit, your transaction would be declined. However, you can actually go over your credit limit if you opt into an over-limit arrangement. After that, transactions that exceed your credit limit will be authorized, and you acknowledge that you may be charged a fee for it.
You do not opt in merely by applying for a credit card. When you apply for the card, the issuer could provide a notice that allows you to go with the over-the-limit arrangement. The opt-in should be a separate provision not tied to other features of a credit card application.
An issuer could also send you a separate form, with your monthly statement or other communication, to opt in to over-the-limit transactions. You could also call the issuer or email it to affirm your consent.
Further, the card issuer will have to confirm that you have opted in to this feature before activating it on your account. The law prohibits a card issuer from tying a higher credit limit offer to your opting in to the over-the-limit protection. The issuer also cannot require you to opt in as a condition of approving your application for credit.
You always have the option to back out of the over-the-limit arrangement. In this case, you are still liable for fines on transactions that put you over your credit threshold before you opted out. The law doesn’t allow an authorized user on a card — who does not share joint responsibility with the cardholder on the account — to opt into or withdraw from the over-the-limit protection.
What is the penalty for going over your credit limit?
If you go over your credit limit after opting in, the CARD Act set a $25 limit as a reasonable amount for a first violation, and a $35 cap for any subsequent defaults within a six-month time frame. Of course, these fees are on top of the interest charges you’ll have to pay if you don’t pay your balance in full and on time.
The CPFB capped penalty fees at $30 and $41 as of 2022. In any event, the fine cannot exceed the amount by which you went over your limit. Also, while an issuer can charge you an over-the-limit fee, it can’t impose a recurring periodic fee just for allowing you to opt in to this feature.
What if a recurring or interest charge puts you over your limit?
In certain circumstances, a card issuer might have to OK a transaction that pushes you over your credit limit, even if you haven’t expressly opted in.
For instance, you make a $20 purchase and before this is charged to your account a different recurring charge is posted. When the $20 is subsequently charged, it makes you go over your credit limit. In situations like this, the issuer cannot charge you a penalty for crossing your credit limit.
Another case in point is if interest charges for a billing cycle push you over the credit limit. The issuer cannot charge you a penalty for that, either. Additionally, it’s left to the discretion of a card issuer whether to approve an over-the-limit transaction, even if you have opted into the arrangement. An issuer could also refuse to continue to honor your opt-in request if it sees you as a credit risk at some point.
How going over your credit limit can hurt your credit score
If you go over your credit limit, that begs the question of how well you’re managing your available credit. Opting in for over-limit transactions is not a get-out-of-jail-free card, and there are consequences for going over your credit limit.
For one, the amount of your available credit that you use factors into your credit score as part of your credit utilization ratio. If you max out your card, that could lower your credit score by more than 120 points, according to FICO.
You could also see your interest rates go up if the issuer sees you as a higher credit risk after your over-the-limit spending is reflected in your credit report. If you have multiple credit cards, your other credit card issuers might notice the change in your credit score and raise their rates as well. What’s more, if you decide to apply for additional credit cards in the future, lenders could review your credit reports, see that you have a history of spending over your limit and set your interest rates accordingly.
What are the alternatives if your credit limit is low?
There are a few alternatives you should consider to avoid going over your credit limit or paying the associated over-the-limit fees. One of the most obvious alternatives is to request a credit limit increase from your card issuer. Just be aware your issuer may perform a hard inquiry on your report.
If you have a good credit score and a solid track record of on-time payments, you may have a decent chance of getting the boost. If you’re looking to boost your credit score first, it may make sense to hold off.
Another option is to consider other credit cards you may have. If you have a card with a higher credit limit, you may be able to shift some of your purchases to it as long as it’s not maxed out. If you do this, don’t forget to take into account things like rewards and interest rates. You could also open a new credit card. Keep in mind that this will reduce your average credit age, which impacts your credit score.
Bottom line
Though going over your credit limit is possible, if you opt in to it, it’s best not to. You’ll avoid possible penalties like over-the-limit fees, increased interest rates and a lower credit score.
If your income has risen and you can justify the additional spending, you could ask your issuer for a higher credit limit. Otherwise, you should aim to be responsible with your spending and not view going over your credit limit as a choice.
Editorial Disclaimer
The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.
Poonkulali Thangavelu is a senior staff reporter at CreditCards.com. She focuses on legislation and regulation, discerning how public and private policies impact card users. She has extensive journalism experience covering personal finance and business topics and likes to simplify such subjects to enable readers to make good decisions. Poonkulali is also the author of CreditCards.com's bi-weekly "Fine Print" column. Her career includes a stint doing consumer market research for global advertising agency Ogilvy & Mather.
FAQs
Will your credit card let you go over the limit? ›
Going over your credit card limit is possible, but it likely will cost more than the convenience is worth. Although over-limit protection – a card feature that allows you to spend over your credit limit – might save you the embarrassment of a declined card, it could mean paying fees and even higher interest rates.
How much should you not go over your credit limit? ›Just because you can go over your limit doesn't mean you should. The Consumer Financial Protection Bureau recommends keeping your credit card usage under 30%.
What happens if you go over your credit limit but pay it off? ›If you go over your credit limit, your credit card company may add the over-limit amount to your minimum payment, lower your credit line, or even close the account if you're exceeding the limit too often. Also, your credit score will drop if the balance is still over the limit when reported to the credit bureaus.
What happens if I max out my credit card but pay in full? ›If you can max out a card and pay the full balance off on or before your next bill due date, your ratio won't be affected. That's because a credit card issuer only reports your information to the major credit bureaus once a month.
What happens if my credit limit is too low? ›Ask Your Current Credit Card Issuer for an Increase
Some issuers allow you to request an increase directly through their websites—and are often able to provide you with instant approval. You can also call your issuer and speak with a customer service representative to request an increase.
Your credit card issuer may be willing to waive the over-the-limit fee the first time you go over your credit limit. Just call your credit card issuer and ask if you can have the fee waived. They may be willing to remove the fee from your account as long as you've otherwise kept your account in good standing.
How much should I spend on a 300 dollar credit limit? ›A good guideline is the 30% rule: Use no more than 30% of your credit limit to keep your debt-to-credit ratio strong. Staying under 10% is even better.
What happens if I use 100 of my credit card? ›Maxing out your credit card means you've reached your credit limit — and if you don't pay that balance off in full immediately, this can hurt your credit score and cost you significantly in interest.
Does Capital One let you go over limit? ›Capital One will assess transactions that put balances over the limit and approve or deny them on an individual basis. There is no fixed amount that you can go over your limit and each transaction is approved individually.
How much money is on a maxed out credit card? ›A maxed-out credit card is at, very near, or even over its credit limit. 1 For example, if your credit limit is $1,000 and your credit card balance is $1,000, by definition, your credit card is maxed out.
Why is my credit limit only $500? ›
If you're issued a credit card with a low credit limit, it could be for a number of reasons, including: Poor credit history. High balances with other credit cards. Low income.
What is the lowest credit limit you can have? ›Your first credit limit may be as low as $100 if your first credit card is from a retail store, but you might be approved for a slightly larger credit limit up to $500 if your first credit card is issued by a bank or credit card company.
Can I get a credit card with a $300 limit? ›Total Visa® Card — $300 Credit Limit
Every new Total Visa® Card comes with a $300 spending limit, regardless of your credit history. This is an unsecured credit card, meaning there is no deposit required for activation.
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 using a debit card or cash.
What does over limit mean credit card? ›Your credit limit can be understood as the maximum spending amount your credit card issuer has allowed you to spend. Anybody who spends above this limit will have to pay an over-limit fee. Customers should avoid spending over this limit altogether to limit themselves.
How do I use more than my credit card limit? ›You can use the 'over limit' facility anytime you cross the credit limit of your card in a billing cycle. However, exceeding the limit will affect your credit score. Hence, you must use such a facility only in the case of emergencies.
How much should I spend on my credit card if my limit is $200? ›To keep your scores healthy, a rule of thumb is to use no more than 30% of your credit card's limit at all times. On a card with a $200 limit, for example, that would mean keeping your balance below $60. The less of your limit you use, the better.
What is considered a very high credit limit? ›A high-limit credit card typically comes with a credit line between $5,000 to $10,000 (and some even go beyond $10,000). You're more likely to have a higher credit limit if you have good or excellent credit.
What is a normal credit limit to have? ›But even with good credit, the average credit limit you can expect to get with a first credit card is generally between $500 and $1,000. Average credit: If you have fair credit, expect a credit limit of around $300 to $500. Poor credit: Credit limits between $100 and $300 are common for people with poor credit scores.
What if I go over 30% of my credit limit? ›If you exceed your credit limit on a specific credit card, your card issuer could increase the interest rate you pay on that card. If you have multiple credit cards under your name, your other credit card issuers might notice the change in your credit score and raise their rates as well.
Should I use 100% of my credit limit? ›
Using less of your available credit is generally best for your credit scores because using a large amount of your available credit could mean you'll have trouble repaying that debt. If you want to keep your scores healthy and your credit reports in good shape, you should try to use as little of your credit as possible.
What credit limit is too high? ›It's recommended you don't exceed 30% of your available credit limit to maintain healthy credit scores. You want good credit scores (a FICO score of 690 or higher, for instance) to benefit from lower interest rates on future loans.
How much should I spend if my credit limit is $1000? ›A good guideline is the 30% rule: Use no more than 30% of your credit limit to keep your debt-to-credit ratio strong. Staying under 10% is even better. In a real-life budget, the 30% rule works like this: If you have a card with a $1,000 credit limit, it's best not to have more than a $300 balance at any time.
How long does over the limit stay on credit report? ›You also make your payments on time after that past late payment. Once the late payment is seven years old, the delinquency generally can't be included in the history of that account on your credit report.
Can I add extra money to my credit card? ›Yes, your bank can do that for you. It may increase the credit limit of your existing card if you make a request. This, of course, will depend on various factors, like your credit history, credit score and income.
How much of a $500 credit limit should I use? ›Lenders generally prefer that you use less than 30 percent of your credit limit. It's always a good idea to keep your credit card balance as low as possible in relation to your credit limit. Of course, paying your balance in full each month is the best practice.
Should I pay off my credit card in full or leave a small balance? ›It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
What's a normal credit limit? ›What is considered a “normal” credit limit among most Americans? The average American had access to $30,233 in credit across all of their credit cards in 2021, according to Experian. But the average credit card balance was $5,221 — well below the average credit limit.
Can you buy a car with a credit card? ›Putting a car down payment on a credit card is an option that many dealers are open to. Dealers may be more willing to allow this type of payment for the total amount, or a partial amount, of your car's down payment.