How does the transfer limit work?

How is data transfer calculated? What happens if I go over? If there is a charge, is it possible to set up my VPS to shut down when I go over?

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The transfer limit is a total of both incoming and outgoing traffic on your droplet’s public network. As detailed statistics are not yet available in the control panel for bandwidth use, we are not charging for overages at this time. When this changes a notification will be sent out and any bandwidth used in excess of the plan limit will be billed at a rate of $0.02/Gb.