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The Points Guy believes that credit cards can transform lives, helping you leverage everyday spending for cash back or travel experiences that might otherwise be out of reach. That's why we publish a variety of editorial content and card comparisons: to help you find a great card to turn your goals into reality.
Our site may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened with our partners, and this may impact how or where these products appear. While we don't cover all available credit cards, our editorial team creates and maintains all of the analysis of these cards, and our content is not influenced nor subject to review by any credit card company, bank or partner prior to (or after) publication. Please view our advertising policy and product review methodology for more information.
Katie Genter is a digital nomad who has traveled full time since June 2017. She writes and edits stories about points and miles, and loyalty programs, often letting her personal experiences color these stories.
May 15, 2020 • 7 min read
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By commenting, you agree to our Community Guidelines to help create a positive space for conversation. The responses below are not provided or commissioned by the bank advertiser, our partners, or The Points Guy (“TPG”). They have not been reviewed, approved, or otherwise endorsed by any of these parties. All responses are submitted by individual contributors, and neither the bank advertiser, our partners, nor TPG are responsible for ensuring that all posts and/or questions are answered.
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Quick summary
Exceeding your credit limit can result in declined transactions, penalty fees or even account closure, depending on your card agreement and account standing.
Some cards offer over-limit protection, allowing transactions above your limit for a capped fee, but this may put your account in default.
High credit utilization, especially over 100%, can negatively affect your credit score, as utilization is a major factor in credit scoring models.
Requesting a higher credit limit may help manage utilization, but approval is not guaranteed.
What to consider
Over-limit fees are capped by regulation but can be adjusted for inflation and may apply only if you enroll in over-limit protection.
Card agreements often state issuers are not obligated to approve transactions above your limit, even with over-limit protection.
Regularly maxing out your card or 'cycling credit' can lead to negative consequences beyond just fees.
What you'll miss from the article
Detailed strategies for managing credit limits, including how to avoid over-limit situations and minimize credit score impact.
Generated by AI with support from our editorial team.
If you're looking to make a big purchase -- or have been making a lot of purchases over the last few months -- you may wonder what will happen if you go over your credit limit. Does it impact your credit score? Does it trigger fees or impact your other credit lines with the bank? We're going to take a closer look at this question and provide some important context to answer it:
Your credit limit is the amount of credit that your financial institution is willing to extend to you on a particular credit card account. When you apply for a new credit card, the issuer will approve you for a specific credit limit based on your credit history, income, current debts and more.
The transaction may be approved if you enroll in over-limit protection (not offered on all cards)
The transaction may be approved on a one-off, case-by-case basis
Some credit cards offer the option to enroll in over-limit protection. If you enroll in over-limit protection, you are agreeing that you can be charged fees if you go over your credit limit. These fees are capped by the Consumer Finance Protection Bureau so you can only be charged up to $27 for your first over-limit incident and up to $38 for any subsequent over-limit incidents within the subsequent six billing cycles. Note that these fees can be adjusted for inflation, so your fee might be slightly higher.
Going over your credit limit puts your account in default based on most cardmember agreements. So, you may face various negative consequences, such as a higher interest rate, requirement to pay the overage immediately, an elevated minimum payment or even cancellation of your card.
But, especially if your account is in good standing, the issuer may approve a transaction that will put you over your credit limit even if you haven't enrolled in over-limit protection (or the card doesn't offer over-limit protection). And, it's even possible that you might not face any negative consequences if you pay down your balance quickly.
I don't recommend enrolling for over-limit protection, and I don't do so on my credit cards. This is because I'd prefer that a transaction be declined instead of pushing me over my credit limit. Even though the fees for going over your credit limit aren't excessive, I'd rather not incur these fees and put my account in default.
However, one reason to enroll in over-limit protection is if you don't want to face a declined transaction. For example, if you only carry one credit card, it may be worth opting for over-limit protection to avoid being declined under embarrassing or inconvenient circumstances.
How much can you go over your credit limit?
(Photo by shapecharge/Getty Images)
Your cardmember agreement may have language along the lines of, "We are not obligated to allow your account to go over its credit limit" (which is what the cardmember agreement states for one of my Chase credit cards).
So, you may not be able to go over your credit limit at all. But if your account is in good standing, the issuer may approve over-limit transactions -- especially if you've enrolled in over-limit protection. However, it is up to the issuer as to how much you may be able to go over your credit limit.
The first step to not exceeding your credit limit is to know your credit limit. Your credit limit should be listed on your monthly statement and should also be visible when you log in to your online account.
The second step is to know your current balance, which should also be visible when you log in to your account. Ideally, you want to keep your credit utilization ratio 20%. If you have a relatively low credit limit, you may want to pay off your credit card balance more frequently than just once a month. But, maxing out your credit limit and paying it off multiple times in the same billing cycle is known as cycling credit and can result in negative consequences.
If you frequently find yourself with a higher credit utilization ratio than you'd like, you can ask your issuer for a higher credit limit. You may also be able to split payment between multiple credit cards if you are making a large purchase that would put you over your credit limit on an individual card. Likewise, if you have multiple credit cards from the same issuer, you may be able to shift credit between cards.
Going over your credit limit is a sign that you may not have your finances in order -- especially if you do so repeatedly. Going over your credit limit will usually put your account in default. And, once your account goes into default, you may face negative consequences such as higher interest, lower credit limit, higher minimum payments and more.
Plus, going over your credit limit can harm your credit score. Credit utilization accounts for 30% of your FICO score, which is one of the primary methods for calculating credit scores. Generally, you want to have a credit utilization ratio of 20% or lower. This means if you have a $10,000 credit limit, you ideally shouldn't have a current balance of more than $2,000 at any given time. If you go over your credit limit, you'll have greater than 100% utilization on that card, which is certainly worse for your credit score.
It's not bad to request a credit limit increase, as the issuer can always decline your request if they aren't willing to provide an increase at this time. And, if you are successful in obtaining a credit limit increase, your credit score may improve since your credit utilization will be lower assuming you keep your spending rate the same.
Bottom line
Going over your credit card limit can have negative impacts ranging from penalty fees to getting your account shut down. It may also result in no consequences, as long as you pay the excess amount quickly. For the sake of your credit score, it's best to keep your utilization rate low and going over your credit limit can jeopardize that.
Comments
By commenting, you agree to our Community Guidelines to help create a positive space for conversation. The responses below are not provided or commissioned by the bank advertiser, our partners, or The Points Guy (“TPG”). They have not been reviewed, approved, or otherwise endorsed by any of these parties. All responses are submitted by individual contributors, and neither the bank advertiser, our partners, nor TPG are responsible for ensuring that all posts and/or questions are answered.
