Credit Limit Tips

Your credit limit is an important feature on your card. Reaching over 50% of it, for instance, can get points deducted from your credit score - going over, even worse. Going over your limit will also get you additional charges (usually $39 a month every billing period that you’re over) and probably prompt the credit card company to raise your APR. If you have multiple cards, it’s normal for the other card companies to increase your APR with them as well when they see you spending too much with at least one of your accounts.

Here are a few tips regarding your credit limit and how to use it to ensure that your credit card experience stays a positive one.

1. Spend only a fraction of your credit limit. Your credit limit is not your spending limit, don’t ever think of it as that. If possible, keep it within reasonable levels (around 30% to 40%) - amounts you can pay off comfortably without going deep into debt.

2. Use your credit limit as a cushion for emergencies. Keeping a large-enough balance will allow you to save your credit limit for what it’s best used for - a financial buffer when you need liquid funds during unexpected circumstances.

3. Sign up for email alerts (most cards with online services provide this) when you reach certain milestones with your credit limit. Sometimes, you end up enjoying the cashless shopping too much and end up ignoring how much balance you’ve actually been using up.

4. Call your card issuer and ask them to disallow purchases that will put you over the credit limit. Most will be happy to oblige.