Many times the spending through credit card exceeds the limit. Many people do this unknowingly, while some people do this out of compulsion. Not all banks allow spending more than 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 more than the limit. Due to this, the customer has to pay extra fees. Secondly, it can affect the customer’s credit score. Let us try to know about this in detail.
Some banks allow usage beyond the limit
Some banks allow their selected customers to spend more than 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 look at 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
Under compulsion, one can spend more than the limit through credit card. But, you have to pay a price for it. Companies or banks that issue more credit cards charge over-limit fees. This fee can be Rs 500-1000 or a few percent 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 your credit score
The third important thing is that spending more than the limit on credit card can have a bad effect on your credit score. Credit score is affected by credit utilization ratio. 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 this good. Experts say that 30 percent credit utilization ratio is considered good for credit score.
You can ask the bank to increase your credit limit
If sometimes such situations arise when you are forced to spend more than the credit card limit, then you can ask the bank to increase the card limit. 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 those customers who have a good credit score and a good repayment history.
