Don't go over your credit limit

Credit card danger beware

I've always encouraged the use of credit cards. I have written several articles on the benefits of making purchases with a credit card over debits cards and cash. The only caveat I have ever made is that the credit card should be paid off in full every month.

Paying your credit card off in full should prevent any charges from being incurred and ensure that you will never have to pay he heavy interest charges. I set up a direct debit from my current account to pay off the card in full each month. So, it was to my surprise that on my last credit card statement there was a charge for £12. My immediate thought was that there must have been some sort of mistake as I proceeded to call my bank to sort out the problem and ensure that I was reimbursed. Good job I checked my statement! I would encourage you to do so each month.

Credit card over limit disaster

Unfortunately, the credit card company was not willing to reimburse my money. As it turned out, I had gone the other way, spent and paid off too much on my card. I had exceeded my credit limit. It didn't matter that I was able to pay off the card in full, nor that it was the credit card company's own system that allowed me to exceed my limit. The charge was for exceeding my limit and as was explained to me, there would be no wavering of my charge.

Ironically, had I been a less cautious borrower, accruing debt and paying interest, the credit card company explained that they may have wavered the charges on a late interest payment. However, since I was the type of customer that would never be in that situation, the Company looks to make whatever money it can, as such, no charges could be wavered.

The lesson that I have learnt from this is twofold:

1) I need to pay closer attention to the amount that I am spending on my credit card. I need to try to stay well within my credit limit. In fact to build my credit score, it is suggested that I keep within a third of my credit limit on each card.
2) I really should have made sure that I knew all of the potential charges on the card. I was naive in my thinking that the credit card company simply wouldn't allow me to overspend on my credit card

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1 comment

Anonymous said...

The other option is to raise your credit limit so that you never exceed it. I also pay mine off every month in full and have my limit set at $17000 so that I never hit the limit.