Credit card overlimit and late payment fees
Usually you won't be charged for going over your limit, but you do need to pay on time to avoid fees and other penalties. Here's what you need to know.
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Depending on your bank or issuer, an over-limit transaction using your credit card may be declined, approved and subject to a fee, or approved with the expectation that it is paid back straight away.
Late payment fees, on the other hand, are still very common. 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. Another option is a balance transfer credit card that allows you to pay 0% p.a. interest for a set number of months (for example, up to 24).
Over limit policies
As long as your card wasn't opened before 2012, the following apply. If your account was opened before 2012, please contact your bank directly to enquire about overlimit fees.
| Provider | Notes |
|---|---|
| American Express |
|
| ANZ |
|
| Bank of Melbourne |
|
| BankSA |
|
| Bankwest |
|
| Citi |
|
| Commonwealth Bank |
|
| Great Southern Bank |
|
| HSBC |
|
| Latitude Financial Services |
|
| NAB |
|
| St.George |
|
| Virgin Money |
|
| Westpac |
|
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 overage amount immediately. If your card doesn't allow you to go over your credit limit, the transaction may be declined and you'll be unable to use your card until you pay down some of the balance.
If you do need to spend more than your credit limit, contact your bank and discuss your options for requesting a credit limit increase.
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.
Late payment fees
If you don't pay at least the minimum required by the due date on your statement, a late payment fee of around $10-$30 could apply. It may then be charged for each subsequent statement until a payment is made.
If this happens, interest will accrue on both the original balance and the penalty charges. 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. So in some cases you might have 10 days to make a payment and in others you might have 21 days (or more) from when the statement's issued.
Based on these details, you could be charged a late payment fee if you've made a payment just before your statement was issued and haven't made another one before the due date. This is possible even when the payment you made was worth more than the minimum amount listed on the statement because technically your payment would have been made in the previous statement period.
To put it simply: A payment must be made after the statement is issued for it to count towards the specified minimum repayment amount.
So, what should your next steps be if this happens to you? 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.
Then, set a reminder in your calendar or schedule automatic payments based on your account's statement period. Usually, the dates are similar each month but if you're unsure, call your provider and ask them for a date range that will allow you to avoid late payment fees in the future. You can also call them if you're ever worried you won't be able to make a payment by the due date.
What other penalty fees may be charged?
The penalty or exception fees that apply to your credit card (or other bank accounts) varies between accounts and financial institutions. But as well as late payment fees, some of the most common 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.
| Bank | Dishonour fee | Overdrawn account fee | Credit card late payment fee | Credit card overlimit fee |
|---|---|---|---|---|
| ANZ | $6 | $6 | $20 | $20 |
| Commonwealth Bank | $5 | $15 | $20 | $10 |
| National Australia Bank | $30 | N/A | $15 | N/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
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 automatic repayments
The simplest way to ensure your bill is paid each month is to set up automatic repayments - so the balance is pulled 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'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.
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, 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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Ask an Expert
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?
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
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?
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
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?
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
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.
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