Credit Cards For Bad Credit - Over-limit Secrets You Need To Know

In order to survive today's competitive climate among credit cards for bad credit

, banks have resorted to increasing their schedule of fees. To curb the number of unfair practices towards people with financial problems, law makers are currently working on passing legislation for 2010 to protect the consumer. In spite of this protection, it's important for you to understand the terms of your card. Falling into the pit of constant over-limit fees can make you a slave to never ending debt.

Outrageous Over-Limit Fees

Do you know the limits on each of your cards? If you don't, now is a good time to find out. Whenever you incur charge over your limit, the bank assesses an over-limit fee. Recently, banks have raised over-limit fees to as high as $39. Some have even tiered their fees to increase when your balance exceeds $1,000.

All It Takes Is Once

With banks who offer credit cards for bad credit, you'll find it almost impossible to waive these penalty fees when you exceed your cards limit. Cards with a low limit can easily set you up for an over-limit trap since it doesn't take many charges to max out your account.

If your balance is already near the maximum, all it takes is one automatic charge or late fee to send your balance over the limit. Unless you're able to pay your balance below the limit, you'll be assessed continual over-limit fees month after month. Trying to climb out of the cycle of $39 over-limit fees can be almost impossible, especially if you can barely make the minimum payments.

Avoid The Trap

The best way to avoid falling into this over-limit trap is to pay off your card balances monthly. If you aren't able to do this, pay your balance down to 30-35% of your cards limit. This will benefit you twofold by improving your FICO score and preventing you from exceeding your limit.

If you're thinking of applying for one of the credit cards for bad credit, be sure to familiarize yourself with the card's terms and conditions and what fees are charged. Knowing this information upfront prevents unwanted charges being added to your account.

by: Bobby Tan

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