New laws were put into place earlier this year about the over the limit charges that could be charged on credit as well as debit card transactions. Caps were put in place, as well as a lowering of fees, making the fines much less. Now you are even given the option of protecting your credit cards in case you go over the limit. You should be able to keep up with your finances and not go over your credit limit in the first place, before this year, even if you went over you limit by just one dollar, you could incur fees as high as $35 or more, depending on the credit card company or bank.
Over Limit Coverage means Less Fees
Now you are almost always offered some form of over the limit fee protection. One is that the fees themselves have be greatly reduced, or even waived if you only over drew on your credit card one time, or by only a few dollars. There is also an option to opt out of this protection, which means that if you go someplace and charge your credit or debit card, if you don’t have efficient funds, you card will simply be denied. While this may be embarrassing, not only does it totally prevent you from overspending, it really makes you have to be more aware of your finances.
Most banks, including Bank Of America, Wells Fargo, and US bank, just to name a few have a couple of different options when it comes to overdraft protection or over the limit protection. One is through a savings account. You open up a savings account in your banking institution with a certain dollar amount, let’s say for an example, $200. If you are using your debit card or credit card and you go over your limit, instead of incurring a fee, whatever you have gone over is automatically transferred from you savings account into you checking or credit card account.
This does two things, one it means that if you accidentally go over, it won’t effect your credit score. The second advantage is that instead of paying thirty dollars for the over draft, the fee is half that. In addition, if the over the limit is small, in most cases you won’t even get charged a fee at all.
Over the Credit Limit Coverage
The next way banks set up for over the limit coverage is by applying for a bank credit card. It is still through one of the major companies, usually Visa, but again, if you are over the limit on your credit card, the money is transferred from this line of credit instead. You can also have a savings account linking both your debit card as well as your credit card, to cover any over the limit problems.
Credit cards from Visa, American Express, Capital One, and Chase offer this protection as well, but this protection is more for their benefit. As of February, credit card companies can’t charge a fee for your over the limit transactions, unless you opt for overdraft protection. This allows you to have over the limit transactions, but withing certain limits. Having this protection will now incur fees just like before which can be expensive. It is really better to opt out of this protection, there by forcing you to keep better track of your credit card spending, rather than get denied when you are at a restaurant with your girlfriend.