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Credit card overlimit and late payment fees

Usually you won't be charged if you go over your credit limit, but you do need to pay on time to avoid fees and other penalties.

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Credit card limits are supposed to be the maximum you can spend or carry as a balance on your account, so going over that limit could lead to a declined transaction. But some cards will let you go over your credit limit for a fee or for a short period of time – meaning you'd need to pay it back straight away.

If your credit card payment is late for any reason, you could be charged a late payment fee. This is a type of penalty or dishonour fee. As both late fees and going over your limit can affect your account and credit score, let's take a closer look at these options.

Credit card over limit policies

As every credit card provider has its own way of treating overlimit situations, here you'll find details of the policies for major providers in Australia.

ProviderNotes
American Express
  • All credit card accounts are allowed to spend over limit with the expectation it is repaid immediately
ANZ
  • 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
  • No overlimit fees apply
BankSA
  • No overlimit fees apply
Bankwest
  • If debits to your credit card take you over your credit limit then a $10 overlimit administration 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
  • No overlimit fees apply
Commonwealth Bank
  • No overlimit fees apply
Great Southern Bank
  • No overlimit charge applies. 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 be arranged to allow spending over the credit limit and an overlimit charge of $30 will apply
Latitude Financial Services
  • 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, you will not be charged a fee but the amount is due immediately
St.George
  • No overlimit fees apply
Virgin Money
  • No overlimit fees apply
Westpac
  • Whether or not you can spend over your credit limit depends on factors like your history of repayments on your account
  • You can contact Westpac and opt out of being able to exceed your credit limit

Keep in mind that these details apply for most credit cards in Australia, but if your account was opened before 2012, contact your bank directly to enquire about overlimit fees.

How much can I go over my credit limit?

If your bank or lender allows you to overdraw your account and exceed your credit limit, typically, you must repay the overlimit amount immediately. If your card doesn't allow you to go over your limit, the transaction may be declined until you pay down some of the balance.

If you need to spend more than your credit limit, you could think about applying for a credit limit increase. Or, contact your bank to see if any temporary options are available.

What does "pay immediately" mean when you go over your credit limit?

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.

Otherwise, your credit card provider could decline any new transactions you try to make with your card. 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.

Do credit cards have a daily limit?

Credit cards do not have a daily spending limit for most everyday transactions. But there could be a cash advance limit for ATM withdrawals and other cash advance transactions. This is usually shown as a percentage of your credit limit such as 80% of your available credit, or a fixed amount such as $1,000.

Some credit cards also let you set limits for specific types of transactions, such as international currency spending or gambling. With this type of limit, you have control over what amount you set – as long as it's within your overall credit limit amount.

Late payment fees

If you don't pay at least the minimum required by the due date on your credit card statement, a late payment fee of around $10 to $30 could apply.

This fee may then be charged for following statements until a payment is made and interest will accrue on both the original balance and the penalty charges.

Tip: You can set up auto-payments so you never miss a credit card repayment. And if money's tight, call your credit card provider to explain the situation. They can discuss financial hardship options based on your circumstances.

Can a late payment fee technically be charged if you've recently made a payment on your credit card?

Credit card late payment fees can be charged whenever you haven't paid the minimum amount required by the due date on your statement.

Looking at these two factors in more detail will help explain how and when a late payment fee may be charged (even when you've recently made a payment).

  • Minimum payments: This is the absolute minimum amount you need to pay off your statement and is usually calculated as a percentage of your balance, such as 2-3%. The minimum payment is typically listed on the first page of your statement, along with other key details such as the due date and your closing balance for that period.
  • The due date: Once your credit card statement is issued, you'll have a set amount of time to make a payment before it's considered "late". The gap between when the statement is issued and the due date for a payment depends on your card but typically ranges from 10 to 21 days (or more) from when the statement's issued.

This basically means that a payment must be made after the statement is issued for it to count towards the specified minimum repayment amount. So technically, you could be charged a late payment fee if you made a payment just before your statement was issued and didn't make another one before the due date.

If that happens, contact your credit card provider to discuss the late payment fee and find out exactly why it was charged in your case. You could also ask what impact it could have on your account. If you have a history of making regular payments, point that out as well.

In 9 years I've never paid credit card interest - here's how

What other penalty fees may be charged?

Penalty or exception fees vary between accounts and financial institutions. But as well as late payment fees, some of the most common penalty fees include:

  • Payment dishonour fee. This fee may apply if you have set up a periodic payment or a regular direct debit from your account and the payment is declined due to insufficient funds. A payment dishonour fee could also apply if you have set up an automatic repayment to your loan or credit card account and the payment is declined.
  • Overdrawn account fee. Similar to a credit card overlimit fee, this charge applies when you write a cheque or make a debit card transaction that takes your account overdrawn.

These fees are less common than the ones above, but are still worth keeping in mind:

  • Outward cheque dishonour. This is when you write a cheque that is not covered by sufficient funds at the time the cheque is presented for payment, causing the cheque to bounce.
  • Inward cheque dishonour. This fee applies when someone writes a cheque to you but their account does not contain sufficient funds to cover it at the time you present it for payment.
  • Stop cheque. This happens when you have written a cheque and given it to someone then decide that you want to cancel it. If the cheque is presented for payment after it has been stopped, you may be liable for another fee.

How much do bank penalty fees cost?

The cost of these charges largely depends on your bank and the specific account. In general, most exception or "penalty" fees range from $4-$30. To give you some idea of the charges that could apply, the table below shows what penalty fees Australia's major banks ANZ, CommBank, NAB, St.George and Westpac charge and how much they cost if they apply to your specific account.

BankDishonour feeOverdrawn account feeCredit card late payment feeCredit card overlimit fee
ANZ$6$6$20$20
Commonwealth Bank$5$15$20$10
National Australia Bank$30N/A$15N/A
St.George$9$9$15$15
Westpac$5-$9$15$15$15

Note that these penalty fees may not be applied to every account you have. Each lender has its own set of account terms and conditions, so it's important to refer to your credit card or bank account Product Disclosure Statement for full details of which fees you could be charged and how much they will cost you.

How to avoid overlimit, late payment and other fees

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 getting charged fees:

  • Repay your balance in full each month

If you can, 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, pay as much as you can to help keep interest costs down and void 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 automatic repayments

The simplest way to ensure your bill is paid each month is to set up automatic repayments, where the balance is deducted from your bank account and you don't have to worry about remembering to manually make payments. There are a couple of ways you can easily do this, such as setting up internet banking. If you have a smartphone, you can download the bank app and monitor your balance at any time.

  • 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 want to avoid it, 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.

  • Contact your provider

If you are charged a penalty fee that you feel is unfair, you can call your provider to dispute the charge. If you're not happy with the outcome, you could lodge a complaint with them or contact the Australian Financial Complaints Authority (AFCA) on 1800 931 678.

Keep in mind there are specific situations when you can and can't get a transaction reversed – so it's good to check if your situation is one of them.

Spending over your credit limit by a couple of dollars isn't going to cost you, but financial institutions will still charge when you miss a payment. What's more, missing credit card payments can impact your chances of getting approved for other types of finance such as a home loan or a car loan.

If you need help with your credit card, contact your provider straight away to discuss your options. You can also speak to a financial counsellor for free by calling the National Debt Helpline on 1800 007 007.

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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?

    • Avatarfinder 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?

    • Avatarfinder 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?

    • Avatarfinder 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.

    • Avatarfinder 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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