Most credit cards come with a credit limit that is calculated with interest monthly. For example, if you have a credit card with a $500 limit, that means you have $500 available to use. However, it is important to remember that the credit limit includes the interest of your purchases as well. So if you spend $499 with your $500 credit card, you are actually over your credit limit. That is because you have to include the 17.9% interest rate, which would make your new credit total approximately $506.
These overages on your credit card are reported to the credit bureau, which is how these small but costly mistakes can hurt your credit. It is crucial to monitor and be informed about your credit limit to maintain good credit. Leave a comment below if you would like more credit card tips and tricks!