What Happens If You Accidentally Overdraw on Your Credit Card?

Check your credit card user agreement for penalties and fees.

When you overdraw an account, you have essentially exceeded the balance of available funds in your account. In a banking situation, your bank account would be overdrawn until you deposited more money into the account, and your bank would charge you an overdraft fee for any items that were covered despite a negative balance in the account. If you overdraw a credit card account, it is commonly referred to as being over the limit. The consequences vary depending on your credit card company's practices and procedures.

Declined Transactions

If you have accidentally overdrawn your credit card account, you may find that your credit card company refuses to process any additional transactions. Even if you have not yet exceeded your credit limit, a pending credit transaction may be denied if the transaction total will result in a credit card balance exceeding the credit limit. You may have a credit card transaction declined at the credit card terminal, or your credit card issuer may decline payment for any automated bills you have linked to the credit card.

Over-the-Limit Fees

If your credit card account balance exceeds your credit limit, your credit card issuer will more than likely assess an over-the-limit fee, which can increase the credit balance even further. Your credit card issuer is required by law to disclose the fees and penalties that may be assessed. Standard over-the-limit credit card fees typically range from $29 to $35 as of 2011, but your credit card company may assess an even higher fee.

Increased Rates

Going over your credit card limit signals an inability to properly handle the credit that has been extended to you. Since you present a credit risk in the eyes of your credit card company, you should expect that your credit issuer may increase the interest rate you pay on your credit account. Going over your credit limit even one time can trigger an interest rate hike that may last for the life of your credit account.

Account Penalties

You could face additional fees and penalties if you accidentally overdraw on your credit card. Depending on how much and how often you exceed your credit card limit, your credit card company may consider you too much of a credit risk. The credit card issuer may reduce your overall credit limit, they may institute an annual fee to your account, or they may even suspend or close your account and remove your charging privileges. You would lose your ability to use your credit card, and your credit score could be negatively impacted.

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