Spending over your credit limit
What happens when you spend more than your credit card limit?
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When you apply for a credit card, you're approved for a set credit limit that you can spend up to. You should always aim to spend responsibly and within your credit limit. When you spend more than your credit limit, the transaction may be declined. Other cards may allow you to make the purchase but will charge a fee if you exceed your credit limit. However, most card issuers don't allow cardholders to spend beyond their credit limit following regulation reforms in 2012.
If you're struggling to make repayments, you should contact your bank immediately to discuss your options. They may be able to organise a repayment plan to help you get your debt under control. You should also order a copy of your credit report and check if your credit score has been impacted.
You can use this guide to learn how to avoid spending more than your credit limit.
How much can I go over my credit limit?
Most credit card issuers don't allow you overdraw your limit and will decline your transaction if you spend beyond that amount. Then you may be unable to use your card until you've paid down your debt below the credit limit. If you need to spend more than your credit limit, contact your bank and discuss your options for requesting a credit limit increase.
How to avoid going over your credit limit
Although some issuers give you the option to spend beyond your limit and be charged a fee, it's best to spend responsibly and within your limit. Here are some tips to help you avoid going over your limit:
Repay your balance in full each month
You should always aim to pay off your credit card balance at the end of each statement period so that you can avoid interest. If you can't afford to pay it off in full, you should still attempt to clear as much of the debt as you can. Not only will you reduce your interest costs, but you'll also avoid going over your credit limit.
If your balance is close to your credit limit, remember that any interest rates or fees (such as a cash advance fee charged after you use your card for an ATM withdrawal) could push you over your credit limit. This is why it's important to check your statement regularly and stay on top of your balance. Check out Finder's guide to paying your credit card bill on time for more tips.
Set up online, mobile or telephone banking
The simple answer is to keep an eye on your credit card balance. There are a couple of ways you can easily do this, such as setting up internet or telephone banking. If you have a smartphone, you can download the bank app and monitor your balance at any time. It's also required by law for the lender to notify you when you're about to exceed your credit limit. If you have online, mobile or telephone banking set up, the card provider can send you a text notification when you're about to exceed your credit limit.
Impose a hard limit on your credit card account
If you have a provider that allows you to spend over your credit limit, and you're sick of incurring credit card overlimit fees, the simplest solution is to give your lender a call and let them know that you want to impose a 'hard limit' on your credit card account. This means that once you reach your credit limit, any transaction that would have taken you over limit will be declined.Back to top
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