Credit card usage has increased rapidly with the growth of digital payments in India.
But along with this, many users unknowingly cross their credit limit and end up paying high overlimit fees.
After receiving a large number of complaints, the Reserve Bank of India (RBI) has introduced an important rule change that brings major relief to credit card users.
RBI Stops Automatic Overlimit Activation
Earlier, many banks activated the overlimit feature without asking the customer.
This allowed users to spend beyond their credit limit, and later they were hit with heavy charges.
Under the new RBI guidelines, no bank can activate the overlimit feature unless the customer clearly gives permission.
This practice of automatic activation has now been completely banned.
Full Control Through Banking Apps
To give customers more control, the RBI has instructed all card issuers to include an overlimit control option in their mobile apps, internet banking platforms, and mobile banking.
Users can now switch the feature on or off anytime, depending on their preference.
This control must be available 24/7, ensuring customers always stay aware of their spending limits.
No Overlimit Fees Without Permission
A major change in the new rule is that if a customer has not allowed the overlimit feature, the card will simply decline any transaction beyond the credit limit.
Even if the limit is crossed due to a technical error, the bank cannot charge any overlimit fee.
This helps customers avoid unnecessary penalties caused by accidental overspending.
Why the RBI Changed the Rule
The RBI explained that the decision was made to strengthen financial security and reduce the risk of fraud.
The overlimit feature often leads to sudden high spending, which later becomes a financial burden for many customers.
By making the feature optional, the RBI aims to promote responsible spending habits and protect consumers.
How the Overlimit Feature Works
Imagine your credit card limit is ₹1 lakh.
If the overlimit feature is enabled, you can go beyond ₹1 lakh.
If it is disabled or not approved, the bank will block the transaction the moment the limit is crossed.
If your bank has charged you an overlimit fee without your approval, you can raise a complaint with the bank first.
If the issue is not resolved, you can file a complaint on the RBI Ombudsman portal, and you are entitled to a full refund under the new rules.
