Credit Card Overlimit: 5 Risks You're Ignoring

Credit cards let you spend beyond your limit in emergencies, but overlimit fees, higher interest, and a damaged CIBIL score can turn a short-term fix into a long-term financial headache. Here's what you must know before using it.

Here's what happened: Banks allow credit card spending beyond your sanctioned limit — typically 10–20% extra — but charge an overlimit fee of ₹500–₹600 plus GST per billing cycle.. Credit bureaus like CIBIL track your credit utilisation ratio; going overlimit pushes it above 100%, which can drop your credit score significantly.. RBI guidelines require banks to take explicit opt-in consent from cardholders before enabling the overlimit facility — many customers don't realise they've agreed to it..

What you should do: Check your credit card app or net banking right now to see if the overlimit facility is enabled — disable it if you don't need the emergency buffer.. Keep your credit utilisation below 30% of your total limit across all cards to protect your CIBIL score from unnecessary damage.. If you've already spent overlimit, pay it off before your billing cycle closes — outstanding overlimit amounts attract interest rates of 36–42% per annum..

Pro tip: If you genuinely need more spending room, call your bank and request a permanent credit limit increase instead — it improves your utilisation ratio and costs nothing.