Credit Card Limits

UNDERSTANDING CREDIT CARD LIMITS

Credit cards offer great spending flexibility. However, it is important that you do not spend more than your available credit limit.

Unfortunately, many consumers are not familiar with the penalties associated with making charges on their credit card that exceed their limits and are shocked when they are hit with an over-the-limit fee. In fact most people only learn about over the limit penalties after having to pay one. This is a result of not reading the fine print of credit card agreements. The typical fee for going over the limit ranges from $29 - $35. In addition, your credit will likely be adversely affected as a result of this overspending.

The fees for going over the limit associated with any credit card will be clearly displayed in its agreement. In addition, your monthly statement will detail your available credit limits as well as your balance information and payment due dates.

How is it possible to spend more than my credit limit?

If you buy something with your credit card that is more than your available credit limit, your card issuer will do one of two things: reject your transaction, or approve it and impose the over-the-limit penalty fee.

In favor of the consumer, it is also common for credit card companies to automatically increase your credit line if you make a purchase that exceeds your credit limit. It is important to note that this is typically only done for their best customers, i.e. someone that has been an account holder for many years, has never been late on their payments and has sustained minimal credit card debt.

Specific offers will be presented to people with certain credit profiles. Credit card companies have a precise formula when determining when it is OK for a client to go over their limit, and by how much. Remember, if they decline purchases, they lose money.

Tips on how to avoid going over your credit limits

The fees being imposed by credit card issuers for exceeding limits is increasing, and is going to keep increasing with each passing day/month/year. Below are a few tips that will help you avoid spending more than your available limits.

- Always keep close tabs on your spending. This will help you know where your spending is in relation to your limits. A good idea would be to leave a generous cushion in the event that you need to make an unexpected purchase.

- Enroll for free e-mail alerts of account activity and bill payment notices. Doing so will result in you receiving alerts if you are approaching your credit limit. You also be notified when a new bill is due for payment.

- Be aware of what your exact limit is, and what your current balances are. It is also possible for you to request that your credit card issuer does not allow any charges to be made once you reach your limit.

- If you plan on making a large purchase that is going to be more than your limit, call your credit card company and make a request for a credit line increase.

Jacob Joseph is a financial expert for http://www.starloanservices.com At Star Loan Services you can apply for credit cards for people with bad credit.

This entry was posted on Friday, March 16th, 2007 and is filed under Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.