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Can you overdraft a credit card?

Avoid overlimit fees and interest by opting out.

Updated

Fact checked

Generally, the answer is “no.” Most credit cards don’t allow you to “overdraw” on your account. If you try to make a purchase on your card and you don’t have funds, your purchase will be denied. However, some issuers will allow you to opt-in to this feature. Here’s why you shouldn’t do it.

What happens if my credit card is overdrawn?

Going over your credit limit can have unpleasant consequences that vary between cards and providers. Some of the common outcomes include:

  • Overlimit fees.
    Typically, your card provider may charge you an overlimit fee when you go beyond your credit card limit. This is often a flat fee for the statement period, although some lenders may impose the same fee for each transaction exceeding your limit. Following the 2009 credit card reforms, banks must disclose this fee in your contract and you have the right to opt out of the option to exceed your credit limit. Doing so will cause over-limit transactions to be declined.
  • Declined transactions.
    If you choose not to have the option to exceed your credit limit, your card will be declined if a transaction exceeds your credit limit. Any direct debits or automatic payments that come through during this time will also be declined, which may result in late payment fees by your service provider or cancellation of services.
  • Interest charges.
    Some cards deem you ineligible for interest-free days on purchases if you don’t repay your balance in full for two consecutive periods. This means your interest fees can be retroactively charged for the period and can mount up very quickly in the next period if you don’t repay your full balance for the current statement cycle.
  • Ongoing debt.
    Inadvertently, regularly maxing out your credit card spells ongoing debt if you’re not able to repay the full amount each month. Carrying an outstanding balance on your credit card can lead to heavy interest payments and create even greater debt.

How to deal with overdrawn credit card accounts

There are other options available apart from a balance transfer, including:

  • Making additional repayments.
    This can be an effective way of staying within your credit limit. By making repayments twice a month instead of monthly, or more often if necessary, you can successfully avoid maxing out your card and potentially avoid some interest.
  • Requesting a credit limit increase.
    You may be eligible for a higher credit limit if your credit score is good and you’ve had a healthy history of making regular repayments with this card provider. You can usually request an increase in your credit limit online or by contacting your provider over the phone.
  • Contacting your provider.
    It’s often a good move to call your credit card provider for a chat. If you explain your circumstances, they’re usually more than willing to discuss your options and offer possible solutions in order to keep your business.

Could a balance transfer help?

If you’ve overdrawn on your credit card account because of ongoing debt issues, it may be worthwhile to consider using a balance transfer credit card with a low or 0% introductory interest rate.

This can help you save on interest charges so that you can pay off your original debt sooner. Consider these possible balance transfer offers:

  • Short-term balance transfers.
    If you have a small debt which you can confidently repay in a short time, a short-term balance transfer should suffice. Short-term balance transfer offers typically come with a 0% intro APR on balance transfers for six months.
  • Long-term balance transfers.
    If your debt is going to take longer to chip away, consider balance transfers for a longer term. You can find long-term balance transfer offers with a 0% intro APR for 12, 15, 18 and even 21 months.
  • Balance transfer and purchase rate offers.
    If you plan to keep using the card for new purchases while paying off the balance transfer, consider getting a credit card with both a promotional balance transfer and purchase rate offer to help you effectively save on all interest.However, if you’re concentrating on paying down your debt, a card with a low purchase rate might not be a wise option.

Compare balance transfer credit cards

%
Name Product Amount saved Balance transfer APR Balance transfer fee Recommended minimum credit score Filter values
Citi® Diamond Preferred® Card
0% intro for the first 18 months (then 14.74% to 24.74% variable)
$5 or 3% of the transaction, whichever is greater
740
An impressive 18 months intro APR on balance transfers and purchases, as well as no annual fee make this one of the top 0% APR cards available.
Citi® Double Cash Card
0% intro for the first 18 months (then 13.99% to 23.99% variable)
$5 or 3% of the transaction, whichever is greater
740
Get a strong 18 month 0% intro APR on balance transfers AND up to 2% back. This is a rare card that offers both rewards and balance transfers.
Luxury Card Mastercard® Titanium Card™
0% intro for the first 15 billing cycles (then 14.99% variable)
$5 or 3% of the transaction, whichever is greater
700
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
TD Cash Credit Card
0% intro for the first 15 billing cycles (then 12.99%, 17.99% or 22.99% variable)
$5 or 3% of the transaction, whichever is greater
680
3% on dining and 2% on groceries make this a valuable card for food purchases. Use it while traveling, too, with no foreign transaction fees. Available in: CT, DC, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT
CardMatch™ from creditcards.com
See issuer's website
300
Use the CardMatch tool to find cards you're likely to qualify for with your credit score, without a hard pull on your credit.
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Compare up to 4 providers

Bottom line

Overdrawing an account is never fun, but there are several ways to recover. If you’re struggling with debt, a balance transfer may help provide the breathing room you need.

Scoring a card with a 0% intro APR that has a high enough credit limit for you to transfer all of your credit card debt over to could be just what you need to get your finances under control. However, a long-term solution may involve seeking help for debt management.

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