Ask Finder: What does “pay immediately” mean when you go over your credit limit?

Posted: 5 June 2019 10:51 am

A man and woman looking concerned as the man checks his phone.

Even if you aren't charged an over limit fee, there are other issues that can come from not paying off a credit card balance that's higher than your limit.

Dear Finder,
For credit cards that don't charge an overlimit fee, what do they mean by "pay immediately"?
Maxxed out

Credit card providers are diligent in letting people know when they have gone over their approved credit limit. When that happens, the phrase "pay immediately" – or any variation of that – means you urgently need to pay off the amount you owe above your credit limit.

So, if you had a $3,000 credit limit and owed $3,250, you would need to pay at least $250 off your card as soon as possible. Otherwise, your credit card provider could decline any new transactions you try to make with your card.

This includes any direct debit or automatic payments that are due to come out of your credit card account – although it does depend on the provider.

NAB, for example, says, "being over the limit could mean we decline any new transactions. This might include automatic payments or direct debits, like gym memberships or online streaming subscriptions."

If automatic payments are declined, you could be charged a fee by the business you have set up the payment with and/or have your account suspended until payment is made.

ANZ offers another example of how going over your limit may be addressed. It has an Informal Overlimit service that is considered when a transaction "would result in the outstanding balance on the credit card account temporarily exceeding your credit limit".

Each time this happens, ANZ assesses the transaction to determine if it's eligible for the Informal Overlimit service. If it's approved, you'll be charged interest on the transaction until the over limit amount is paid off.

This means there is an added incentive to pay off the over limit amount as soon as possible – even if there's no over limit fee.

The majority of other providers offer variations of these terms – unless the account was opened before 2012 or you have opted for an account that lets you go over the limit.

But, regardless of your credit card provider, you should always deal with an over limit account as soon as possible. And if you can't pay off the over limit amount straight away, make sure you contact your provider to explain what's going on and work out a solution.

If you think you'll end up going over your credit limit again in the future, you may also want to request a higher credit limit or set up notifications when you're close to your limit so that you can avoid spending above that amount.

And if you're struggling to pay off your credit card, take a look at balance transfer credit cards to see if there's one that can help you deal with this debt.

Ask Finder is a regular column where Finder's expert writers answer your questions. All rates and fees are correct at the time of publication and we only give general advice.

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