What is Credit Card Over-limit Facility and How to Use It?

In today’s world, credit cards are an indispensable financial tool. They offer convenience, security, and various rewards. However, one aspect that many cardholders may not fully understand is the credit card over-limit facility. In this article let’s delve into what credit card over-limit facility is, why it is provided, and how you can use it effectively.

Understanding Credit Card Over-limit Facility

The credit card over-limit facility allows cardholders to exceed their assigned credit limit. Essentially, it provides a financial cushion in case of emergencies or unexpected expenses. When you utilise this facility, you are borrowing money beyond your set credit limit, which can be handy in situations where additional funds are immediately required.

Why is the Over-limit facility given?

The over-limit credit card feature is designed to offer flexibility and financial support to cardholders. Here are some key reasons why banks and credit card issuers provide this facility:

1.  Emergency Expenses

Life is unpredictable, and emergencies can arise without warning. The credit card over-limit facility ensures that you have access to extra funds when you need them the most.

2.  Convenience

If you’re close to your credit limit and need to make a crucial purchase, the over-limit facility can prevent transaction declines and the inconvenience that comes with it.

3.  Customer Loyalty

Banks and credit card issuers aim to build strong relationships with their customers. By providing an over-limit facility, they demonstrate trust and flexibility, which can enhance customer loyalty.

Also Read- What is the Average Credit Card Interest Rate?

How to use the credit card Over-limit Facility?

Using the over-limit credit card feature responsibly is crucial. Here’s a detailed guide on how to make the most of this facility:

1.  Know Your Limits

Before using the over-limit facility, understand your current credit limit and the amount you are allowed to exceed. This information is typically available through your bank’s online portal or customer service.

2.  Check for Fees

Using the over-limit facility often comes with additional fees. Ensure you are aware of any charges that may apply so you can consider them while making your decision.

3.  Assess the Necessity

Use the over-limit facility only for essential or emergency expenses. This will help you avoid unnecessary debt and manage your finances better.

4.  Repayment Plan

Have a clear repayment plan in place. Over-limit amounts are added to your total outstanding balance, and timely repayment is crucial to avoid high-interest charges and potential damage to your credit score.

5.  Monitor Your Spending

Regularly monitor your credit card statements and spending. This practice will help you stay within your means and ensure you are not habitually relying on the over-limit facility.

Also Read- How To Pay Credit Card Bills Through Google Pay?

Airtel Axis Bank Credit Card

If you’re looking for a credit card that offers extensive benefits and flexibility, the Airtel Axis Bank Credit Card is an excellent choice. With this card, you can enjoy up to ₹16,000 in annual cashback, 25% cashback on Airtel services, and 10% cashback on utility bill payments and partner merchants like Swiggy, Zomato, and BigBasket. Additional benefits include dining discounts, fuel surcharge waivers, and domestic lounge access. The card has a joining fee of ₹500 and an annual fee of ₹500, which can be waived if your annual spend exceeds ₹2 lakhs. With a maximum credit limit of up to ₹5,00,000, the Airtel Axis Bank Credit Card provides ample spending power and flexibility.

Conclusion

Understanding and responsibly using the credit card over-limit facility can significantly enhance your financial flexibility. Whether facing an emergency or needing additional spending power, this facility is a valuable tool. However, it is essential to use it carefully to avoid unnecessary debt and financial strain. Additionally, choosing a credit card like the Airtel Axis Bank Credit Card can further enrich your financial experience with its extensive benefits, robust features, and generous cashback offers.

Also Read- 10 Best Credit Cards for Online Shopping

FAQs

1.  What happens if I exceed my credit limit?

If you exceed your credit limit without an over-limit facility, your transaction will be declined. However, with the facility, your transaction will be approved, but you may incur over-limit fees.

2.  Are there any risks associated with using the over-limit facility?

Yes, there are risks. Over-reliance on this facility can lead to increased debt and higher interest payments. Additionally, frequent use may negatively impact your credit score.

3.  How can I avoid over-limit fees?

To avoid over-limit fees, monitor your spending closely and try to stay within your assigned credit limit. Setting up alerts for when you approach your limit can also help.

4.  Is the over-limit facility available on all credit cards?

No, not all credit cards offer an over-limit facility. It is best to check with your credit card issuer to see if this feature is available on your credit card.

5.  Can I opt out of the over-limit facility?

Yes, most banks allow you to opt out of the over-limit facility. Contact your credit card issuer to understand the process and implications of opting out.