How over-limit fees work in Connecticut

If you have a credit card, you can decide to enter a “credit card over-limit” agreement with your credit card issuer in Connecticut so that your card can never be declined when making payments. But, this option comes with penalties and extra fees that could be stressful for you. If you have been pondering about how over the limit fees work or have issues with yours, here is what you need to know.

What are over the limit fees?

Every cardholder has a credit limit. When you reach this limit, your card is usually declined, but if you proceed to make the payment, credit card companies will charge a penalty fee for going beyond your limit. This penalty is what’s known as an over-the-limit fee.

How do over the limit fees work?

Credits cards are an unsecured form of debt, which means credit card companies have no collateral in case you refuse to make your payments. So, to minimize their consumer debt financial risks, they either decline you from making extra payments when you have reached your limit, or they charge you additional fees for any purchase made after reaching your limit.

You could just automatically exceed your credit limit early on, and the credit companies would charge you extra fees. However, today, you must manually agree to opt into over-limit fees; otherwise, your card will be automatically declined. By doing this, you are agreeing to extra charges when you exceed your limit by giving the credit card company the green light.

These fees could be expensive, but these depend on the credit card company you are using. However, according to the 2009 Card Act, the credit card company cannot charge you more than the amount you exceeded. For example, if you exceed your limit by $250, the company has the right to charge you fees up to $250.

How to avoid over-limit fees

The simplest and easiest way to manage your over-the-limit fees is not to choose this option. Your card will be automatically declined when you reach your limit.

If you feel like the credit card company has charged you excessively for going over the limit, then you should call them to address the issue. The first over-limit penalty should not exceed $27, and the second $38.