Digital payments have grown rapidly in India, and credit cards have become a routine part of daily spending.
But many people unknowingly cross their credit limits, leading to heavy overlimit charges.
After receiving a rising number of complaints, the Reserve Bank of India (RBI) has introduced an important change that brings major relief to card users.
RBI Stops Automatic Overlimit Activation
Until now, many banks activated the overlimit feature without informing customers.
This meant users could easily spend more than their credit limit and later face unexpected charges.
Under the new RBI rule, banks and credit card companies cannot activate the overlimit facility without clear customer approval.
This automatic activation is now completely banned.
Control Overlimit Settings Anytime
The RBI has also instructed all card issuers to provide overlimit controls inside their mobile apps, internet banking, and mobile banking platforms.
Customers can now switch the feature on or off whenever they wish.
The option must be available at all times.
This gives users full control over how much they can spend.
No Overlimit Fees Without Permission
If a customer has not allowed the overlimit feature, the card will simply decline any transaction that crosses the limit.
Even if the transaction exceeds the limit due to a technical issue, the bank cannot charge overlimit fees.
This helps customers avoid unwanted penalties and accidental overspending.
Why the RBI Introduced This Rule
The RBI stated that this move is meant to boost customer protection and reduce fraud.
The overlimit feature often encourages sudden high spending, which can later become a financial burden.
By making the feature optional, the RBI aims to promote responsible usage and prevent misuse.
How Overlimit Works in Simple Terms
Imagine your card limit is ₹1 lakh.
If overlimit is enabled, you may be allowed to spend more than ₹1 lakh.
If overlimit is disabled, any spending that crosses ₹1 lakh will be instantly declined.
If your bank has charged an overlimit fee without your permission, you can complain to the bank first.
If the issue is not resolved, you can file a complaint on the RBI Ombudsman portal, and under the new rules, you are entitled to a full refund.
