Credit Card: Not all banks allow spending beyond the limit on their credit cards. Some banks allow this but they charge a fee for this. Experts say that the customer should try not to spend beyond the limit
Credit Card: Many times the spending through credit cards exceeds the limit. Many people do this unknowingly, while some people do this out of compulsion. Not all banks allow spending beyond the limit on their credit cards. Some banks allow this but they charge a fee for this. Experts say that the customer should try not to spend beyond the limit. Due to this, the customer has to pay extra fees. Secondly, it can affect the customer’s credit score. Let’s try to know about this in detail.
Some banks allow over-limit usage
Some banks allow their selected customers to spend beyond the credit card limit. This facility is especially available to those customers who have a good repayment history and who use the card responsibly. Apart from this, banks also check the credit score of the customer. Over-limit transactions are already approved on the cards of such customers.
Banks charge fees for spending more than the limit
Out of compulsion, spending more than the limit can be done through credit card. But, you have to pay the price for it. Companies or banks that issue more credit cards charge over-limit fees. This fee can be Rs 500-1000 or some percentage of the amount spent over the limit. This means that spending more than the limit is an expensive deal for the customer.
It has a bad effect on the credit score
The third important thing is that spending more than the limit on the credit card can have a bad effect on your credit score. Credit utilization ratio affects the credit score. A high ratio means that the customer is dependent on credit or loan to fulfill most of his needs. Banks or NBFCs do not consider it good. Experts say that 30% credit utilization ratio is considered good for credit score.
You can ask the bank to increase the credit limit
If sometimes such situations arise when you are forced to spend more than the limit on the credit card, then you can ask the bank to increase the limit of the card. This way you do not have to pay extra fees for spending more than the limit. Banks themselves keep offering to increase the credit limit of customers who have a good credit score and good repayment history.
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