Can I Go Over My Credit Card Limit?

If you use a credit card, you need to be aware of the fees you may incur if you go over your limit. So, if you’re paying for multiple transactions at the same time and don’t check your statement, the fees can quickly add up.

A credit limit is the maximum amount you can spend on your credit card before you incur a fee. Credit card providers and banks issue cards with pre-set credit limits, but these limits can change over time.

🤓 Nerdy Tip

Consider requesting a higher credit limit if you regularly exceed your current limit, despite having sufficient funds. Banks cannot raise your limit automatically; you must ask as the cardholder.

What happens when you go over your credit limit?

What happens if you exceed your credit card limit depends on who you bank with. Potential consequences include:

overlimit fees (usually ranging between $10-$30)
late payment fees
additional interest charges
the bank temporarily locks your card and declines future transactions
failed automatic payments, which can lead to other fees or service interruptions
negative marks on your credit report that impact your credit scores
disruption in your interest-free periods.

Additionally, consistent issues with staying within your credit limit can be a sign of a larger issue, like having poor money management skills.

How the Big Four banks handle credit limits

CommBank: No overlimit fee (if the account was opened after July 2012), but there may be possible interruptions to credit card usage.
ANZ: $20 overlimit fee.
NAB: No overlimit fee, but all new transactions are declined.
Westpac: No limit fee (if the account was opened after June 2012). The bank may process some transactions, but any amount above the limit is payable immediately.

» MORE: Pros and cons of credit cards

How to avoid going over your limit

Check your credit card balance daily

Know what automatic payments are coming out and when. Transactions and interest charges can add up and put you over the limit if you’re not vigilant.

Review your credit card statement every month

It’s a smart financial practice to monitor your monthly statements to clearly understand how your card works, spot discrepancies and minimise future fees.

Set up alerts to keep your limit in check

Most banks offer SMS or email balance reminders such as NAB Alerts.

Know how your bank treats overlimit transactions

Is there a limit to how many purchases they process? When do they block the card? How does it affect your accrued interest? Ask your bank so you have answers to each of these questions.

Create a budget so credit is always available

Make a list of your payments and purchases on your credit card vs. debit card. Set an available credit ‘buffer’ you’re comfortable with, and once it hits that, stop using the card. A good ‘buffer’ could be $500 and $1,000. The notifications will help you manage this.

» MORE: How to budget money

Pay down your balance regularly

Another easy way to ensure you have available credit is to make weekly payments to reduce the balance owed. Even a small weekly payment (of $50-$100) can prevent you from paying overlimit fees.

To determine how much you should pay weekly, add up all your monthly credit card charges and divide by four. If you’re spending $500 monthly on your credit card, transfer $125 to your card each week (either manually or as automatic repayments).

Request a credit limit increase

If appropriate, and you’ve tried the previous six steps but keep going over, increase your credit limit. Start in $1,000 increments to avoid getting too much too soon. If an extra $1,000 isn’t enough, increase it by $2,000.

If you’re worried about the temptation of having a higher credit limit, you could build up a savings account that matches your credit limit. You’ll know you can always pay it off if something happens and avoid fees.

» MORE: How to pay off your credit card

While there’s no specific waiver application, you can contact your bank and ask them to reverse the fee if it’s not a common occurrence. They may be likely to give you grace if it’s the first time.

If you keep getting overlimit fees, you should look at your credit card use first. If you aren’t spending beyond what you can afford and have room in your budget, consider increasing your credit limit. An extra $1,000 can help you avoid charges and maintain an active account.

Yes, some banks charge fees, and others don’t. It also depends on how old the card is. For example, Westpac and CommBank only charge a $15 fee on credit card accounts opened before June and July 2012, whereas ANZ has a $20 overlimit fee.

DIVE EVEN DEEPER

Credit Card Debt In Australia

Credit cards have benefits but can also lead to crippling debt. Responsible spending and paying more than the minimum balance due can help you steer clear of the red.