Limits on Fees

• Charging an over-limit fee for more than the amount over the credit limit is against the law. If a creditor has your permission to allow charges that exceed your credit limit, the fee must be less than or equal to the amount over the credit limit, according to the Federal Reserve Board. For example, if your transaction exceeds your credit card limit by $15, your creditor cannot charge you a $25 fee.
  
  

Billing Procedures

• According to the Credit Card Act, a creditor cannot charge you more than one fee for a single event or transaction that violates your credit card agreement. This means a creditor can only impose one over-the-limit fee per billing cycle. Prior to the law, it was not unusual for a creditor to charge an over-limit fee involving the same transaction for both the previous and current billing cycle. The one-time fee per transaction rule also applies to other penalties such as late fees.
  
  

Over-Limit Transactions

• Avoid over-limit fees by not allowing them in the first place. In the past, many creditors allowed for transactions that exceeded credit limits if the consumer had a high credit score and a positive payment history. Under current law, a creditor must have your permission to accept or opt in for over-the-limit transactions; otherwise, any charges that exceed your credit limit are automatically denied. You can revoke your decision to opt in for over-the-limit charges at any time.
  
  

Impact on Credit

• Unlike late payments, which are regularly reported by creditors, over-limit fees are not listed on your credit report. However, an accrual of too many of these fees is a sign you are overextending your credit and falling deeper into debt. In fact, exceeding your credit limit on just one card can lower your credit score by increasing your debt-to-credit limit ratio, the amount you owe compared to your total credit available.