10 Things Credit Card Companies Won't Say

Contrary to popular belief, a purchase that puts you over your credit limit won’t necessarily be declined. But you might wish it had been, since it could bump your interest rate into the stratosphere.

Lea Barker, a data-entry clerk in Oakland, Calif., found that out the hard way when she exceeded the limit on her Visa card—and her interest rate skyrocketed to 29.9 percent. The sudden increase was among the factors that ultimately pushed her into credit counseling and a debt-management plan. “I have to find another $1,000 a month to dig my way out,” Barker says. “I’m looking at a second job.”

Adding insult to injury, banks often levy a so-called overlimit fee against maxed-out cardholders—roughly a $30 penalty every month your balance remains above the credit limit. An ABA spokesperson says that “consumers would rather deal with the fee than the embarrassment of being declined.” But consumer advocate Travis Plunkett, of the Consumer Federation of America, is having none of it. Overlimit fees, he contends, are simply another way for banks to make money at the expense of the unwary. “If [banks are] willing to accept charges [over their cardholders’ limits],” Plunkett says, “then they should accept the profit that comes from the increased interest charges” and leave it at that.