What happens if you go over your credit card limit?

A credit limit is the maximum amount you may spend on a credit card or line of credit at a given time. If you reach or go over this limit, also called maxing out your credit card, it can have a variety of consequences, including fees. So it’s important to understand those to help you minimize the potential impact.

Be sure to check your card’s terms and conditions so you're aware of what will happen. Here, we'll explore possible outcomes and discuss strategies for avoiding going over your credit limit.

5 Possible outcomes when you go over your credit card limit

1. Transactions may be declined

If you hit your credit limit, your issuer may decline transactions. This will stop you from going over your limit, and you will not be able to make new purchases until you have paid down your balance.

2. Your minimum payment may increase

If you exceed your limit, your minimum payment may increase by the amount you've gone over the limit. This is to get your balance back below the limit. If you’re having trouble managing your finances, this increase can be difficult to deal with.

3. Your interest rate may increase

Some credit card issuers may apply a penalty APR if you go over your credit card limit. This rate is higher than your standard APR, meaning you’ll pay more for that debt. The penalty APR can apply for several months, even if you get your balance below the credit limit.

4. You may pay an over-limit fee

Some credit card issuers may apply an over-limit fee for going over your credit limit. However, this would only apply if the issuer approves that over-limit transaction and, critically, you must agree to pay the fee, too. That fee can vary depending on whether it’s the first time you’ve gone over your limit. However, it can’t be larger than the amount you over-charged.

You may be more likely to run into this situation if you’ve had a positive payment history.

5. Your account may be closed

Although a one-time occurrence may not result in a closed account, going over your credit card limit for multiple months may mean losing access to that account. This might be temporary, resulting in either a frozen or closed account.

How going over your credit card limit can impact your credit

Your credit utilization ratio is the percentage of your total available revolving credit currently in use. Your credit utilization ratio impacts your creditworthiness. In general, lenders view lower credit utilization ratios more favorably.

When you go over your limit, you’re using over 100% of that credit card’s available credit, increasing your utilization ratio. If that’s your only credit card, or your other accounts have similar utilization, this can negatively impact your creditworthiness.

Strategies to avoid going over your credit limit

It’s generally best to avoid going over your credit limit. Here are 3 options that may help you do that going forward:

• Monitor your spending relative to your credit limit: Tracking your spending can be helpful in avoiding maxing out your credit card, especially if you have automatic payments set up. That way, you’ll be able to spot if your balances are trending upward or you’re getting close to the limit. Then you may take steps, like reviewing your budget, to address the problem before it becomes more serious.
• Set up high credit card usage alerts: These alerts can be a great way to avoid accidentally exceeding your limit. With some Citi cards, for instance, you can set up notifications to alert you when you exceed your credit limit. You may update your alert preferences online.
• Ask your card issuer to raise your credit limit: If your income has increased and you've demonstrated a positive payment history, the issuer may be inclined to increase your limit. A higher limit can help lower your credit utilization ratio, provided you don’t increase your spending. That can help improve your creditworthiness and make you a better candidate for future lending.

Once you get back to a good place with your credit card balances, you may focus on options like finding a higher-limit credit card or applying for a balance-transfer credit card to help you manage your finances. That way, you’ll be back on your way to a better financial future.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.