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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 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
Bankwest
  • Applies to all credit card accounts
  • If debits to your credit card take you over your credit limit then an 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
  • A $40 overlimit charge applies to credit card accounts opened before 1 July 2012.
Commonwealth Bank
  • All credit card accounts - you won't be able to spend over your credit limit.
  • Overlimit fees and charges will apply if bank fees (i.e. cash advance charges/interest charges) or direct debits take you over your credit limit.
ANZ
  • Overlimit charges apply to all ANZ credit card accounts.
  • In some cases ANZ may allow you to spend over your credit limit (direct debits, cash advance charges, paypass facility (doesn't check the available funds on the card) and interest charges will all allow you to exceed your credit limit and incur an overlimit charge of $20.
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.
St.George
  • An overlimit charge of $9 applies to credit card accounts opened before the 4 June 2012. All other accounts that have opted into the option to exceed the credit limit will also be charged an overlimit fee of $9.
Bank of Melbourne
  • The overlimit fee only applies to credit card accounts opened before 4 June 2012. All other accounts that have opted into the option to exceed the credit limit will also be charged an overlimit fee of $9.
BankSA
  • An overlimit charge of $9 applies to credit card accounts opened before the 4 June 2012. All other accounts that have opted into the option to exceed the credit limit will also be charged an overlimit fee of $9.
Coles
  • If you're making a purchase and you go ten or fifteen dollars over your limit, you may be allowed to exceed your credit limit.
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.
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.
HSBC
  • All credit card accounts can spend over their credit limit and an overlimit charge of $30 will apply.
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.
NAB
  • Applies to all credit card accounts.
  • Some transactions will take you over your credit limit.
  • NAB will contact you once per statement period and inform you that you've reached your credit limit.
Virgin Money
  • A $40 charge applies to credit card accounts opened before the 1 July 2012 if they exceed the 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 accidentally 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 by 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 should receive a notification and 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 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 internet 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 on-the-go. It's also required by law for the lender to notify you when you're about to exceed your credit limit. If you have internet and telephone banking set up, the card provider can send you an SMS 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.

Comparison of credit cards that allow you to spend over your limit

Rates last updated July 26th, 2017
Name Product Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Product Description
Virgin Australia Velocity Flyer Card - Exclusive Offer
20.74% p.a.
0% p.a. for 18 months
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Apply by 31 July 2017 to earn bonus Velocity Points for the first three months and a $129 Virgin Australia Gift Voucher each year.
ANZ Low Rate
12.49% p.a.
0% p.a. for 16 months with 2% balance transfer fee
$58 p.a.
Receive up to 55 days interest-free on purchases, up to 3 additional cardholders at no cost and Mastercard PayPass.
St.George Amplify Signature
19.49% p.a.
$279 p.a.
Earn up to 3 Amplify Rewards Points per $1 spent and receive two complimentary airport lounge passes per year.
St.George Amplify Platinum
19.49% p.a.
$99 p.a.
Earn up to 2 Amplify Rewards Points per $1 spent and receive complimentary overseas travel insurance.
St.George Vertigo Platinum
12.74% p.a.
0% p.a. for 20 months
$99 p.a.
Offers complimentary travel insurance, complimentary purchase insurance and access to a 24/7 personal concierge service.
St.George Vertigo Visa
13.24% p.a.
0% p.a. for 14 months
$0 p.a. annual fee for the first year ($55 p.a. thereafter)
Receive up to 55 days interest-free on purchases and the ability to make contactless payments with Visa payWave technology.

Compare up to 4 providers

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6 Responses

  1. 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?

    • Staff
      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?

    • Staff
      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.

    • Staff
      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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