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Going over your credit card limit

What happens when you spend over your credit limit?

Depending on your bank or credit card issuer, an over-limit transaction may be declined, approved, and subject to a fee or approved with the expectation you immediately pay the amount back.

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. or low interest for a set number of months (usually for 6 to 12 months).

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

ProviderCharges
American Express
  • There is no over limit fee. Amex voluntarily eliminated the charge in 2009.
ANZ
  • If you are over your credit limit on the statement date, you will be charged $2.50. This applies to each statement period until you are back under your credit limit.
ASB
  • 3% or $10 of the balance, whichever is greater, when you exceed your credit limit.
BNZ
  • $2 per statement until you are back within your credit limit.
Co-operative Bank
  • N/A
Kiwibank
  • If you exceed your credit limit, you will be charged $5 for each month your balance exceeds the maximum credit limit.
TSB
  • N/A
Westpac
  • $1 when you exceed your account credit limit during any statement period.

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 amount immediately. If your card doesn’t let you go over your credit limit, your provider may decline the transaction, and you can’t use your card until you pay down some of the balance. If you need to spend more than your credit limit, contact your bank and discuss your options to request a credit limit increase.

Compare credit cards for November 2021

Name Product Purchase Rate Annual fee Balance Transfer Rate
OFFER
Q Mastercard
0% for 3 months (changes to 25.99% p.a.)
$50
0% p.a. for 36 months
0% p.a. for 36 months on balances transferred from eligible personal credit cards until 30 November 2021 - offer applies to new customers only. Plus get 3 months zero interest and zero payments on every purchase.
AIRPOINTS
American Express Airpoints Platinum Card
19.95% p.a.
$195
N/A
AIRPOINTS
American Express Airpoints Card
0% for 6 months (changes to 19.95% p.a.)
$0
N/A
Be rewarded with 100 bonus Airpoints Dollars when you apply by 28 February 2022, are approved and sped $750 on your new card within the first 3 months of membership. This offer is available to new Card Members only.
OFFER
American Express Platinum Edge Credit Card
2.99% for 6 months (changes to 19.95% p.a.)
$149
N/A
Enjoy a low rate on purchases and earn 20,000 Membership Rewards Bonus Points if you apply, are approved and spend $750 in the first 3 months of Card membership. This offer is available to new Card Members only.
OFFER
American Express Platinum Card
N/A
$1,250
N/A
Get the new metal Platinum Card, 80,000 Membership Rewards bonus points, up to $300 dining credit and $200 to spend on travel each year. Offer available to new customers who apply online, are approved and spend at least $1,500 in the first 3 months. Exclusions, Ts&Cs apply.
LOW RATE
The Co-operative Bank Fair Rate Credit Card
12.95% p.a.
$20
0% p.a. for 6 months
0% p.a. on balance transfers for 6 months, plus benefit from a low rate of 12.95% on both purchases and cash advances.
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Compare up to 4 providers

How to avoid going over your credit limit

Although some issuers give you the option to spend beyond your limit and a fee is charged, it’s best to spend responsibly and within your limit. Here are some tips to help you avoid going over your limit:

  • Repay your balance in full each month

It would be best if you always aimed 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 do you reduce your interest costs, but you 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 essential to check your statement regularly and stay on top of your balance.

  • Set up automatic repayments

The simplest way to ensure you pay your bill 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 make payments manually. There are a couple of ways you can easily do this, for example, setting up internet banking. If you have a smartphone, you can download your bank’s app and monitor the balance at any time.

  • Impose a hard limit on your credit card account

Suppose you have a provider that allows you to spend over your credit limit, and you’re sick of incurring credit card over-limit fees. In that case, 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 your lender declines any transaction that would take you over the limit once you reach it.

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