Beware of over-the-limit fees when using a credit card before your payment is processed

By Jeremy M. Simon

Consumers may get hit with fees for going over their credit limit if they don't pay attention to when their monthly bill payment posts.

While the cardholder may send their payment in to the credit card issuer well before the due date, the bank may not process their payment immediately.  As a result, simply having the issuer receive the payment does not mean the credit card balance is immediately reset to zero.

If that cardholder happens to be very near their credit limit before sending off payment, but then makes additional charges before the payment gets processed, those charges could push them over their credit limit.

A call to the credit card issuer's customer support number (usually provided on the reverse side of the card or on the monthly statement) to explain the situation may be enough to get over-the-limit charges reversed.  Still, it is best to avoid getting into this situation in the first place.

How can consumers avoid getting into this situation?  The first strategy is to know your credit limit and stay well below it unless absolutely necessary.  If you are already near your limit and end up having an emergency expense that needs to be put on a credit card, some unwanted fees could result.

Another strategy is to use online bill pay.  Most banks include their web address on the back of their credit card.  By going online to set up an account, you can pay your credit card balance off before you ever receive a monthly statement.  Additionally, it could help your payment get processed faster.

To comment on this story, write Editors@CreditCards.com.

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Published: May 14, 2007

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