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. That said, it’s more likely that the card’s issuer will simply decline any transaction that would result in the balance exceeding the credit limit.
The only time credit card issuers can charge an over-limit fee is when a cardholder has opted in for the ability to exceed their credit limit. Even when you’ve given your credit card company permission to authorize over-limit charges, card issuers can only assess one over-limit fee per billing cycle, and that fee cannot exceed the amount by which the cardholder has gone over the limit. Ever since the CARD Act of 2009, which created these over-limit rules, most card issuers have stopped charging over-limit fees. Instead, they often just decline transactions that would go over your limit.
Finally, don’t forget that credit utilization accounts for about 20% of your overall credit score. You should always be careful not to use your credit card’s full credit limit, since maxing out a card may damage your credit score significantly. To avoid reaching your card’s credit limit, consider paying down your balance more often, applying for a new line of credit, or asking your card’s issuer for a credit limit increase.
To see the credit utilization on each of your credit card accounts and learn how that usage may impact your credit score, create a free WalletHub account online and check out the Credit Score Simulator.