Swearing off the plastic because of the disadvantages of using a credit card is not always a smart idea. Using credit cards can help you to gain rewards and build credit.
And while you definitely want to use credit cards so that you can take advantage of the benefits of being a cardholder, you wouldn’t want to spend too much and end up holding a balance.
You need to make some adjustments if you fail to adhere to fair spending limits and find that you regularly charge too much on your credit cards. Here are several tips to help you avoid spending over the credit limit allocated to you, so you can avoid over-limit fees.
Don’t Opt-In to Credit Limit Fees
Before they can charge you a credit limit fee, the credit card issuer needs to have your authorization. Over-limit purchases can be “opted out” of.
If you do so, you will not be charged an over-limit fee for any transaction that would place you over the maximum. Your charge could go through if you preferred over-limit protection, but you could be faced with charges, higher interest rates, or lower credit limits.
Attributed to the high balance on your card, you might also see your credit score decrease. Your credit card issuer could close your credit account if you incur too many over-limit fees.
Know Your Credit Limit
If you don’t know what your credit limit is, it is much easier to go beyond your limit. You can find out what your credit limit is by checking your billing statements, logging into your online account, or by contacting your credit card customer service number found on the back of your credit card.
If the issuer of your credit card has a mobile app, you can download the app to access your account. Since creditors often increase and lower credit limits, checking your limit regularly is a smart option.
Keep Track of Your Current Credit Card Balance
You’ll want to stay on top of what you’re spending with the card after putting restrictions on how much you can charge every month. You can do this by logging into your online credit card account on a frequent basis.
Sign in daily or weekly to see what your current card balance is. Evaluate the amount you have spent and the funds you have left to cover your bill or to the limits of spending you have imposed for yourself.
If at the end of each month you’ve surpassed your spending limit, or you realize you’re not going to have ample money to pay off your balance in full, avoid spending further in order to lessen your credit card debt.
Look Into Apps That Alert You When You’re Overspending
When your credit card balance reaches a certain amount, there are several apps that allow you to set personalized alerts.
To establish spending limits on particular spending categories, you can also use budgeting apps and connect your accounts to the app so that you can easily monitor whether you are staying to your limits.
When you get near to your budgeted amount or surpass your limit, many of these apps will notify you. You will be alerted right away when you start spending too much, even if you fail to notice your card balance. This is going to inform you when it is time to stop spending.
Bottom Line
Although short-term gratification can be obtained by spending beyond your credit limit, it can cause long-term money difficulties, including penalties, debt, and harm to your credit score.
If you go over your credit limit, recall why you went over your cap in the first place, and evaluate your budget.