Everything you need to know about the Credit Card over-limit facility

Credit limit is one of the first things you’ll be informed about when you sign up for a credit card. As your expenses get closer to the credit limit, you may start receiving alerts from your credit card provider.  Ideally, it is best to keep your credit card utilisation rate to within 30% of the limit. However, occasionally, you may find yourself in situations where your spending may exceed the amount. This is where credit card over-limit becomes relevant. 

Understanding Credit Card Over-Limit

Let's say the limit on your credit card is Rs. 1.5 lakh. This means you need to keep your monthly spending within the Rs. 1.5 lakh limit. However, some banks and credit card companies will allow you to swipe your card over and above the specified credit limit. This over-limit may range between 10% and 20% of the original credit limit, depending on the bank’s policies. Thus, in the above example, you may be able to spend Rs 1.8 lakh on your credit card instead of Rs 1.5 lakh. 

Banks such as IDFC FIRST Bank offer a convenient over-limit facility that lets you meet urgent financial needs. This credit card over-limit benefit can be especially handy at certain times, such as festive or wedding seasons, or when you face a temporary financial crunch. There are other advantages offered by IDFC FIRST Bank Credit Cards as well: 

• While some banks charge up to 5% of the over-limit use, IDFC FIRST Bank credit cards have a much lower over-limit fee of 2.5%. This is subject to a minimum spend of Rs. 500

• IDFC FIRST Bank waives this fee for an over-limit use that’s up to 10% of the credit limit

• If you hold the IDFC FIRST Bank's FIRST Private credit card, no charges are levied on over-limit use ​​

Alternatively, you can opt for the easy EMI facilities offered on IDFC FIRST Bank credit cards in case of high-value purchases. You can also choose to pay the minimum amount due and carry forward the balance to the next cycle.

Steps to Enable Over-limit Facility on an IDFC FIRST Bank Credit Card

You can enable the over-limit facility on your IDFC FIRST Bank credit card via communication sent by the bank or through the IDFC FIRST Bank mobile app.

Utilising the Credit Card Over-limit

As a credit card user, using or declining the over-limit facility is entirely up to you. In either case, you must agree to the terms and conditions. It is important to note that you can only use the over-limit feature after giving your consent to the bank to allow this facility. Banks may also approve your transactions that exceed the credit limit as a service gesture. 

Banks usually expect you to utilise this facility only in exceptional circumstances. Presently, there are no standard rules on credit card over-limit. However, such a facility is generally available up to a reasonable point. 

How to Avoid Over-Limit Charges 

• Pay close attention to the expenses made using the credit card during the credit cycle

• Ensure that your card company/bank sends you a notification when your card utilisation is high. IDFC FIRST Bank alerts cardholders when they reach 80% of the card’s credit limit

• If you do not need the over-limit facility, deactivate it so that you don’t over-utilise it unknowingly

Conclusion

It is essential to monitor your card usage to avoid over-limit usage, especially if it's unnecessary. Remember that you can reach the over-limit amount due to fees and interests charged against your card. Delayed payments can result in late fees, and your total dues will increase significantly when added to the credit card over-limit.

Use this facility carefully and, if you do need it, remember that IDFC FIRST Bank credit cards have minimal charges on the over-limit feature, to help ease your financial burden.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.