Credit cards can be a convenient way to pay for many things, but it is important to know your limits. Exceeding your credit card limit can be a costly mistake; many credit card companies charge exorbitant fees if you go over. Read on for tips on how to stay within your credit limit.

• Exceeding your established credit card limit can be an easy thing to do—with a very costly result. If you go over your limit, credit card companies can hit you with over-the-limit spending fees that can be quite high. In addition, by exceeding your credit limit you run the risk of having an increased interest rate. By following a few simple steps, you can avoid going over the limit.

(Creative Commons photo by Andres Rueda)

• To avoid going over your credit limit, you need to know your parameters. While the ideal would be staying well below the limit, for some it simply isn't possible.

1. Check your credit card billing statement carefully each month; the credit limit should be clearly posted
2. Call your bank or credit lender and ask for your current credit limit
3. If possible, set up e-mail alerts to let you know if you are close to exceeding your credit limit
4. Don't assume you'll be cut off if you make a purchase and exceed your limit; most companies don't have such safeguards in place

• Once you know your limit, keep a careful eye on your spending. Make all monthly payments on time. While paying off the balance in full each month is ideal, it is not always possible. Be sure to pay at least more than the minimum to give yourself a cushion. Try to avoid even coming close to the maximum credit limit, if you can. Keeping a cushion can come in handy if unexpected expenses come up.

• If you find yourself in a bind and dangerously close to your credit limit, or if you know you will soon go over, you can request a credit limit increase. Call your bank or card issuer and ask for an increase before you exceed the limit. Keep in mind, though, that even if you are approved, you will still have to pay back all that you owe. The higher the limit, the higher the chance that you may spend beyond your means.

• Exceeding your credit limit can result in costly over-the-limit fees, and it could ultimately damage your credit score. Keep track of your spending and know your maximum credit limit. Staying within your credit limit shows the card issuer that you have control over your spending. If you are truly in a bind, you can call your credit issuer and ask for a limit increase.

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The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.