Credit cards have many uses, but they are also very easy to overspend on. Exceeding your credit card limit is a remarkably easy trap to fall into, and carries with it a number of risks. Your credit score is one of the major reasons why you should always be wary of even coming close to your credit limit. Just by coming close to your limit, a credit card company may start to see you as more a risk, and as a result, your interest rates could be raised.
If you have a turbulent relationship with your credit card, then it might be time to start looking at ways to make wiser use of them.
The Negative Impact Of Overspending
If you go over your credit card limit even once, let alone on a regular basis, then there will be consequences. The first thing that will happen is that your credit card company will charge you. The penalty will be dependant on how much you have overspent by, and will be added to the interest that you pay on your balance. Your credit score will take a serious hit as well. Credit scores can often feel like a mystery, but the basic fact is that the less of your credit you use, the higher your credit score will be. If you start taking on too much debt, then your line of credit may well be reduced, and you may even have your cards cancelled.
How To Tackle Excessive Credit Card Spending
If you find that you have gone over your credit card limit, then it’s imperative that you contact your credit card company as soon as possible. Early contact can benefit you in a number of ways, but the most important is that the sooner you address the problem, the more chance you have of the company waiving the excess fee.
This will be more achievable if this is your first time overspending on your credit cards, and the more responsible you are, the better. If you are able to pay the balance, then do so as quickly as you can. For every day that you remain over your limit, you accumulate more charges. This cycle can lead to long-term damage to your financial stability.
Options After Extreme Overspending
If you have been using your credit cards to fund your excessive lifestyle, then it may be that you have accumulated too many debts to tackle realistically. If you find that you have a number of maxed out credit cards, then you may need to take further steps to ensure that you can get yourself out of debt as quickly as possible. You have some avenues to explore here, and they will largely be dependant on how much you own and your credit history.
If you find that your debts have become unmanageable, then it is often worth contacting a financial expert. They can advise you, and will be able to recommend how to consolidate your debt in ways that will speed up your ability to resolve issues. They will also be able to find the deal that suits you, and an option that will not accrue excessive interest rates on your consolidated debt repayments.
Next Steps
Once you have a strategy in place to alleviate the pressures of your overspending, it’s time to look at ways to minimise the risk of it happening again. There are many resources available that can help you to guide and control your overspending habits. The most useful is to create a realistic budget and stick to it as closely as possible. If overspending is a habit, then chances are that you have never created a liveable budget before.
Look at the best ways to reduce your spending, and most importantly, assess where you have been overspending. Although living to a strict budget is rarely as fun as living with a spending mentality, the fact is that your long-term financial security will be seriously damaged by bad spending habits. You will need to get these under control if you wish to make the most of your finances. Having a budget in place will help prevent you from making the same mistakes over and over again.
Spending more than you planned to spend does not have to be a cause for excessive alarm. Almost everyone overspends at times. As long as you learn why it happened and the best ways to recover from the situation, it can be easily manageable. The faster you react proactively, the less of an impact your spending spree will have. Tackle the problem head on, and your credit score and financial stability will be much more robust as a result.
Have you been in this position before? If so, what did you do? Did you find these tips/suggestions useful?
*Disclosure: Collaborative Post
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