Over-Limit Fee

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Definition of 'Over-Limit Fee'

An over-limit fee is a charge that a bank or credit union may impose on a customer if the customer's account balance exceeds the credit limit. Over-limit fees are typically charged in addition to the interest that is charged on the amount of the over-limit.

There are a few different reasons why a customer's account balance might exceed their credit limit. One reason is that the customer might have made a purchase that was larger than the amount of available credit on their account. Another reason is that the customer might have not made a payment on their account on time, which can cause the balance to increase.

Over-limit fees can be a significant expense, and they can make it difficult for customers to stay on top of their finances. For this reason, it is important to be aware of the possibility of over-limit fees and to take steps to avoid them.

Here are a few tips for avoiding over-limit fees:

* Keep track of your spending and make sure that you do not exceed your credit limit.
* Set up automatic payments for your credit card bills so that you do not forget to make a payment on time.
* If you know that you are going to be making a large purchase, call your credit card company and ask if they will increase your credit limit temporarily.

By following these tips, you can help to avoid over-limit fees and keep your finances in order.

In addition to the above, it is important to note that over-limit fees can vary depending on the bank or credit union. Some banks may charge a flat fee, while others may charge a percentage of the over-limit amount. It is important to check with your bank or credit union to find out what their policy is on over-limit fees.

Over-limit fees can be a significant expense, but they can be avoided by being aware of the possibility of them and taking steps to avoid them. By following the tips above, you can help to keep your finances in order and avoid over-limit fees.

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