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Spending over your credit limit

What happens when you spend over your credit limit?

Depending on the issuer, some banks give you the option to exceed your credit limit to avoid embarrassment and inconvenience at the cash register, but you'll be notified and charged an over-limit fee if you do.

This guide will discuss the different instances that might cause you to spend beyond your credit limit and which banks let you do this and what they'll charge.

Which lenders let you spend over your credit limit and charge you for it?

ProviderNotes
American Express
  • All credit card accounts are allowed to spend over limit.
  • The amount that you can over limit is judged on a case by case basis factoring in things like the size of the credit limit, previous spending habits and repayment history.
ANZ
  • For credit card accounts opened on or after 18 June 2012 where you consent to being able to go over your credit limit, you will be charged a $20 fee once per statement period.
Bank of Melbourne
  • For credit card accounts opened before 4 June 2012 a $15.00 is fee charged once per statement period.
  • Credit card accounts opened on or after 4 June 2012 do not incur an overlimit fee.
BankSA
  • For credit card accounts opened before 4 June 2012 a $15.00 is fee charged once per statement period.
  • Credit card accounts opened on or after 4 June 2012 do not incur an overlimit fee.
Bankwest
  • If debits to your credit card take you over your credit limit then a $30 Over Limit Fee will be charged in each statement period.
  • You can opt for it not to go over the limit - contact the lender to do this.
Citi
  • For credit card accounts opened before 1 July 2012 a $40 overlimit fee applies.
Commonwealth Bank
  • For credit card accounts opened before 1 July 2012 a $10 fee applies when CommBank first allows you to go over your credit limit in a statement period.
CUA
  • No overlimit charge applies to credit card accounts opened after the 1 July 2012. If you do exceed your limit, the minimum repayment for the next statement period is the overlimit amount. If you don't pay this, you'll be charged a late payment fee of $12.50.
HSBC
  • All credit card accounts can spend over their credit limit and an overlimit charge of $30 will apply.
Latitude Financial Services
  • Applies to all credit card accounts.
  • You cannot spend over your credit limit, interest charges may take you over the limit; however, no fee will be charged for doing so.
NAB
  • Some transactions will take you over your credit limit but you will not be charged a fee.
  • NAB will contact you once per statement period and inform you that you've reached your credit limit.
St.George
  • For credit card accounts opened before 4 June 2012 a $15.00 is fee charged once per statement period.
  • Credit card accounts opened on or after 4 June 2012 do not incur an overlimit fee.
Virgin Money
  • For credit card accounts opened before 1 July 2012 a $40 overlimit fee applies.
Westpac
  • Whether or not you can spend over your credit limit depends on a number of factors - like your history of repayments on your account.
  • However, if your account was opened before the 4 June 2012, you may be able to exceed your credit limit.
  • You can contact Westpac and opt out of being able to exceed your credit limit.

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How you might spend over your credit limit

Whether you simply overspent or accrued some fees that pushed you over your credit limit, there are plenty of ways you might spend beyond your credit limit. The most obvious way is that you haven't repaid your balance, used your card for a purchase and spent beyond the credit limit. However, another way you could accidentally go over your credit limit is through credit card fees. Say you used your card for an ATM withdrawal, the cash advance fee as well as the amount you've withdrawn could be enough to exceed your credit limit. If a transaction like a cash advance charge takes you over your credit limit, you usually have a day to pay the balance down before the overlimit fee applies, so it can depend on how quickly you can pay down the overdrawn balance.

As of 2012, banks and credit card issuers are required to inform cardholders when they're close to reaching their credit limit, so you will receive a notification and you'll know to either pay your balance down or leave your card at home if you're getting close to exceeding your credit limit. Most banks also give you the choice to either block the option to exceed your credit limit or the chance to exceed the limit for a fee. If you do opt to be able to exceed your credit limit, you'll have to sign a consent form and agree to pay a charge of usually between $10 and $20.

The smartest strategy is to keep an eye on your balance, pay attention to any notifications from your bank and either pay down your balance or leave your plastic at home if you're getting close to exceeding the credit limit.

How to avoid going over your credit limit

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.

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8 Responses

  1. Default Gravatar
    RickOctober 12, 2017

    Can your credit card company allow you to go over your limit by $4,000 and not notify you that you are over your limit?

    • finder Customer Care
      JudithOctober 13, 2017Staff

      Hi Rick,

      Please note that finder is an Australian comparison website and general information service. While we do not represent any company we feature on our pages, we can offer you general advice.

      Kindly contact the credit card company that you are referring to. You may also chat with us if you need further assistance on general questions that you may have.

      Best regards,
      Judith

  2. Default Gravatar
    PaulaJune 2, 2017

    If you have an overlimit facility in place with your bank can a merchants own bank setup stop your bank from pushing your card over its limit? Eg $20 available on your card to spend but you have a direct debit with Jane Doe worth $30. You have the overlimit facility with your bank up to $500 but something in Jane Doe’s own setup knows you’re over your limit and will decline the payment? Can that happen?

    • finder Customer Care
      MayJune 2, 2017Staff

      Hi Paula,

      Thanks for your inquiry.

      Basically, yes, a merchant/store can deny a card transaction for a number of different reasons, and one of these is if your card doesn’t have enough funds. If your bank allows you to go over your limit, you would need to contact your bank so this facility is activated. Usually, even this facility is already active, there would be instances that the merchants may still decline your card. So when this happens, the usual immediate solution is that the merchant should call your bank and pass the phone to you so you can verify some details. Best to contact your bank as well to confirm what to do for any future transaction such as this.

      Cheers,
      May

    • Default Gravatar
      PaulaJune 2, 2017

      Thanks May. Thank you so much for responding. What would you say if I said that for years prior to a certain date these different merchants did allow transactions to go over the limit but after that date they all started declining them, every time, and all different merchants. And the bank says that nothing has changed with the account and the overlimit facility is still active. How would you deal with that?

    • finder Customer Care
      MayJune 2, 2017Staff

      Hi Paula,

      Thanks for getting back.

      The acceptance of a card payment is basically depending on the merchant’s discretion, as they are entitled to accept any form of payment they wish for their services. Although I am not really sure why would they not accept your card with an activated over-limit facility, they may have their reasons for doing so. Since your bank has activated your over-limit facility and they have no problem if you will use the facility, it would be best then to maybe obtain an explanation from the merchant why they would decline your card.

      By the way, just to confirm though, as we are comparison website and general information service, we can only offer suitable general advice to any questions you have.

      Cheers,
      May

    • Default Gravatar
      PaulaJune 2, 2017

      Thanks May.

      I totally understand it’s general advice and I’ll only take what you say as guidance, not gospel. I’m just at a loss to resolve this and don’t know who else I can speak to. I have spoken to one merchant who said they have no interest in my own situation and therefore would not suddenly start blocking payments. Just to clarify it’s all merchants eg RACV insurance, Apple iTunes, Netflix, Spotify etc. They all would push payments through previously and now they all don’t. I fail to believe that every merchant I deal with have all decided to decline payments at the same time.

      I was hoping to get more an idea on what happens in the back end at the bank because I think it must have to be them somehow.

    • finder Customer Care
      MayJune 6, 2017Staff

      Hi Paula,

      Thanks for your message as well.

      I completely understand that you’d want this issue resolved. Yes, best to contact your bank too, they may have implemented some conditions on your over-limit facility that could prevent the debiting of payments for the merchants you’ve mentioned.

      Cheers,
      May

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