Credit card question: Does the CARD Act protect me from fees if I go over my credit card limit? Kimberly
Answer: Hi Kimberly,
The CARD Act does place restrictions on over-the-limit transactions. This part of the CARD Act was phased in on February 22, 2010. The new rules give you an opportunity to decide if you want to go over your limit.
You can “opt-in” and tell your issuer that you want to be allowed to go over your credit limit. But if you do, you may be hit with an over-the-limit fee, which averages around $39. You can only be charged this fee once during each billing cycle. The amount of the fee varies, so read your credit card agreement to determine what it is.
Now, you can also tell your issuer that you do not want to “opt-in.” If you don’t opt-in and you go over your credit limit, your card might be rejected at the cash register. Personally, I’d rather have my card turned down than pay a $39 fee.
Another reason not to spend up to your limit and beyond is that it can have a negative impact on your credit score. You should try to keep a revolving credit utilization under 10 percent. That’s hard to do if you’re maxed out on one or more cards.
You also have the option to change your mind if you don’t like the sight of a $39 fee on your statement. You can revoke your opt-in status whenever you want.
[Related Consumer Guide: How the Credit CARD Act of 2009 Affects You]
Image: Wonderlane Wonderlane, via Flickr.com