Definition
A credit card issuer may charge an over-the-limit fee (OTL Fee) whenever a credit card balance exceeds the stated credit limit.
Analysis
The over-the-limit fee is a penalty that is added to a credit card balance if the balance exceeds the credit limit at any time during the billing cycle. If the cardholder fails to reduce the balance to below the credit limit, a subsequent OTL fee could be added in the following month.
Many cardholders that are maxed out fail to recognize that finance charges or even an annual fee could push an account balance over the credit limit. This could cause them to incur an OTL fee even if they made no charges on the account that month.
OTL fees are added to the balance and to the minimum payment calculation. This can increase the minimum payment that a cardholder must pay to stay current on the account.
OTL fees have increased steadily since the mid 1990s. This trend mirrors that of the late fee. The two fees combine to provide a tremendous proportion of credit card profits. OTL fees now may reach as high as $45.
