Going over the limit on your credit card

Dear JNT,

Charging more than your credit card limit could result in over-the-limit fees, a decrease in your credit limit, or other penalties imposed by the credit card provider. Habitually over charging could result in the account being closed by the lender.

Some lenders may decrease your credit limits or increase your interest rates if an over-the-limit status appears in your credit history, so it could affect more than just that one credit card.

Charging more than your limit also hurts your credit scores because it is a strong indicator of poor credit management and high lending risk.

The options for resolving the problem are simple and straightforward: stop spending and start paying.

You must reduce the balance to below your credit limit. That means you have to stop making charges and start paying more than the minimum balance. In terms of creditworthiness, the lower you keep your credit card balance, the better.

New legislation will go into effect soon that will give you more warning and more options for dealing with an account if you receive notice that your terms are changing. The White House issued a press release summarizing the legislation.

But, the rules won‘t make the problem go away. For example, you still may have to make choices about closing the account to avoid higher fees. That can be inconvenient, and there is no guarantee that you will be able to open a new account at a lower rate.

So the best advice is to keep your balances low. That will help you keep the best rates on your card.

Thanks for asking.