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If not for all, credit cards have definitely proved useful for some people. Like everything else in this world credit cards have their advantages and disadvantages. Credit limit- some may call this an advantage and some a disadvantage. Every card has a credit limit, which means the maximum amount one can use without being charged a penalty. It's not a very nice situation if one exceeds or reaches the end of the credit limit.

Most middle class American families largely depend on loans to provide basic things such as a home, car and children's education for their families. Exceeding credit limit on the card can reflect as a bad credit score and can affect ones eligibility to apply for a loan. Maxing out ones credit card is very bad for a credit score. Since all this information is stored, it can be accessible to most money lenders mostly banks. A low credit score is more likely to have your application being rejected or denied.

There are also risks in going over the credit limit. Even if the credit balances are maintained just below the credit limit there are chances of it exceeding the limit when the finance charges are applied. When this is done if the final credit balance exceeds the limit and over limit fee is also applied. If this continues over a period of time it could result in a huge debt that could take ages to clear. Higher the balances, more the time it takes to settle the debt on the card. It is therefore wise to pay credit card bills on time.

Card companies have the authority to raise the interest rates on the card if you exceed the credit limit or max your card. Although this is not mentioned at the time they issue cards, it is definitely mentioned in tiny letters in the 'terms and conditions'. If such a thing happens, the company could levy as much as 30% interest on the card every month which would sum up to 360% a year. The interest itself could be more than the actual credit limit. One must always remember to keep their credit card balances as low as possible. Keeping the credit balance below 10% of the credit limit is a manageable limit acceptable both to the lender and you. One must always check the credit card limit and balance before making any large purchases as it will help prevent a bad credit score