Sneaky Credit Card Trick #1 - Over The Credit Limit Fees

[This post is written and copyrighted by FIRE Finance (]

Over The Credit Limit FeesOften credit card companies charge various types of sneaky fees that catch us unaware. They do list all fees in their fine print and we do agree to abide by them when we open an account. But often there are some practical difficulties which might cause us to err. And then we end up paying heavily.

One of these fees is "over the credit limit fee." Recently we had a brush with this fee. It can be pretty high to the tune of $40. Citibank had charged us $39 for going over the limit.

What is sneaky about this fee?

The sneaky part is that credit card companies do not discourage us from going over our limit. They do approve charges and balance transfers that put us over our credit limit.

Another challenging aspect is that the state of transactions shown online is a delayed snapshot. Often charges take a day or two to post online. So we cannot really figure out how much of our credit is left by glancing online at our card's activity. A phone check on our card's balance often reflects the same state as our online accounts. Similarly, alerts set by us will be delayed (not real time).

So we are on our own to figure out our card's balance. Way(s) out?
  1. Stop using credit cards. Pay cash for everything, even for big purchases. Sadly that won't work for most of us who shop online for almost everything. Credit cards are an extremely convenient tool for shopping and comes with several protections and rewards. We'd like to avail these benefits.

  2. A way out can be tracking our expenses using a tool (online expense tracker, a paper notebook, etc.) that works for us. We've got to diligently update it to keep it current. Before we make a big purchase we need to verify if we have enough credit left to go ahead with a transaction.

  3. Another solution might be to keep a couple of cards. We can charge our everyday purchases to one and bigger ones to the other.

  4. Or perhaps keep several cards (one for each category of expense) with high credit limits. Then we need to carefully charge each type of expense to the corresponding card. This seems to be a pretty cumbersome and unrealistic option!
Whatever we do, the need is to keep track of our total purchases within a billing period to prevent ourselves from going over the limit.

Better Solution?

Credit card companies do make money by charging interest on our balances. It'd have been really appreciated if they provided a reminder when a purchase is about to max out our card. That would help us stay within our credit limits without having us keep a track of our monthly expenses.

Our minds are already busy with the fast pace of our day to day lives. And its really impractical to expect it to remember our total month to date expenses before charging another transaction to our card. So the probability of going over the limit is high. And the sad part is that credit card companies have decided to cash in over this predictable human error!

We are looking forward towards your feedback about over the credit limit fees and creative ways of avoiding it.


Image Source(s): iStockPhoto

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