Credit card overlimit and late payment fees

Credit card limits are supposed to be the maximum you can carry as a balance on your account, so going over that limit could lead to a declined transaction. But some cards will let you go over your credit limit for a fee or for a short period of time – meaning you'd need to pay it back straight away.

If your credit card payment is late for any reason, you could be charged a late payment fee. This is a type of penalty or dishonour fee. As both late fees and going over your limit can affect your account and credit score, let's take a closer look at these options.

Credit card over limit policies

As every credit card provider has its own way of treating overlimit situations, here you'll find details of the policies for major providers in Australia.

Keep in mind that these details apply for most credit cards in Australia, but if your account was opened before 2012, contact your bank directly to enquire about overlimit fees.

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 overlimit amount immediately. If your card doesn't allow you to go over your limit, the transaction may be declined until you pay down some of the balance.

If you need to spend more than your credit limit, you could think about applying for a credit limit increase. Or, contact your bank to see if any temporary options are available.

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.

Do credit cards have a daily limit?

Credit cards do not have a daily spending limit for most everyday transactions. But there could be a cash advance limit for ATM withdrawals and other cash advance transactions. This is usually shown as a percentage of your credit limit such as 80% of your available credit, or a fixed amount such as $1,000.

Some credit cards also let you set limits for specific types of transactions, such as international currency spending or gambling. With this type of limit, you have control over what amount you set – as long as it's within your overall credit limit amount.

Late payment fees

If you don't pay at least the minimum required by the due date on your credit card statement, a late payment fee of around $10 to $30 could apply.

This fee may then be charged for following statements until a payment is made and interest will accrue on both the original balance and the penalty charges.

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 but typically ranges from 10 to 21 days (or more) from when the statement's issued.

This basically means that a payment must be made after the statement is issued for it to count towards the specified minimum repayment amount. So technically, you could be charged a late payment fee if you made a payment just before your statement was issued and didn't make another one before the due date.

If that happens, 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.

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What other penalty fees may be charged?

Penalty or exception fees vary between accounts and financial institutions. But as well as late payment fees, some of the most common penalty fees 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.

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

If you can, 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, pay as much as you can to help keep interest costs down and 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, where the balance is deducted 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 want to avoid it, 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.

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Name	Purchase rate p.a.	Annual fee	Balance transfer rate p.a.	Amount Saved
St.George Vertigo Card	Purchase rate p.a. 13.99%	Annual fee $55	Balance transfer rate p.a. 0% for 32 months, then 21.49%	Amount Saved $2,001.63 over 32 months	Go to siteMore Info Compare	Get a 0% p.a. interest rate on balance transfers for 32 months (with no balance transfer fee).
Citi Clear Card - Exclusive Offer Exclusive	Purchase rate p.a. 14.99%	Annual fee $49 first year ($99 after)	Balance transfer rate p.a. 0% for 24 months with 1.5% balance transfer fee, then 22.24%	Amount Saved $1,563.89 over 24 months	Go to siteMore Info Compare	Offers 0% p.a. on balance transfers for 24 months (with 1.5% balance transfer fee) and a $49 first-year annual fee. Plus, 6-month complimentary Uber One membership valued at $9.99/month.
Westpac Low Rate Card	Purchase rate p.a. 13.74%	Annual fee $59	Balance transfer rate p.a. 0% for 28 months, then 21.49%	Amount Saved $1,768.59 over 28 months	Go to siteMore Info Compare	Save with a 0% p.a. interest rate on balance transfers for 28 months. Plus, a low 13.74% p.a. purchase interest rate.
Kogan Money Card – Exclusive Offer ExclusiveKogan Rewards Program	Purchase rate p.a. 20.99%	Annual fee $0	Balance transfer rate p.a. 0% for 18 months with 1% balance transfer fee, then 21.74%	Amount Saved $1,335.99 over 18 months	Go to siteMore Info Compare	Get 0% p.a. on balance transfers for 18 months with a 1% balance transfer fee. Plus an ongoing $0 annual fee. Ends 31 January 2024.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer Velocity Frequent Flyer	Purchase rate p.a. 20.74%	Annual fee $0 first year ($129 after)	Balance transfer rate p.a. 0% for 24 months, then 20.99%	Amount Saved $1,453.89 over 24 months	Go to siteMore Info Compare	Get 0% p.a. on balance transfers for 24 months (with no BT fee) and a $0 annual fee in the first year. Ends 31 January 2024.
NAB Low Rate Credit Card	Purchase rate p.a. 12.49%	Annual fee $0 first year ($59 after)	Balance transfer rate p.a. 0% for 28 months with 2% balance transfer fee, then 21.74%	Amount Saved $1,768.59 over 28 months	Go to siteMore Info Compare	Get a 0% p.a. interest rate on balance transfers for the first 28 months (with a 2% BT fee). Plus, save with a $0 first-year annual fee.
humm90 Platinum Mastercard	Purchase rate p.a. 25.8%	Annual fee $99	Balance transfer rate p.a. 0% for 12 months, then 25.99%	Amount Saved $828.32 over 12 months	Go to siteMore Info Compare	Offers 0% p.a. on balance transfers for 12 months (with no balance transfer fee), instalment plan options and 0% foreign transaction fees.
Qantas Premier Platinum Qantas Frequent Flyer	Purchase rate p.a. 19.99%	Annual fee $349 first year ($399 after)	Balance transfer rate p.a. 0% for 12 months, then 21.99%	Amount Saved $578.32 over 12 months	Go to siteMore Info Compare	Earn up to 80,000 bonus Qantas Points. Plus, save with a reduced first-year annual fee and 0% p.a. for 12 months on balance transfers.
St.George Amplify Signature Amplify Rewards	Purchase rate p.a. 19.49%	Annual fee $199 first year ($295 after)	Balance transfer rate p.a. 0% for 24 months with 1% balance transfer fee, then 21.49%	Amount Saved $1,217.89 over 24 months	Go to siteMore Info Compare	150,000 bonus Amplify Points (worth $675 in gift cards) when you spend $12,000 in the first 12 months. Plus, a first-year annual fee discount.
St.George Vertigo Card - Cashback Offer	Purchase rate p.a. 13.99%	Annual fee $55	Balance transfer rate p.a. 6.99% for 12 months, then 21.49%	Amount Saved $562.66 over 12 months	Go to siteMore Info Compare	Get up to $400 cashback at eligible supermarkets and petrol stations in the first 180 days. Plus, a low interest rate for purchases.
Qantas Premier Titanium Qantas Frequent Flyer	Purchase rate p.a. 19.99%	Annual fee $1,200	Balance transfer rate p.a. 0% for 6 months, then 21.99%	Amount Saved No savings	Go to siteMore Info Compare	Get 150k bonus Qantas Points when you spend $5k in the first 3 months. Plus Qantas First Lounge Invitations and 20% bonus Status Credits on eligible flights.
Credit Union SA Education Community Credit Card	Purchase rate p.a. 0% for 6 months, then 11.49%	Annual fee $0	Balance transfer rate p.a. 0% for 6 months, then 11.49%	Amount Saved $483.02 over 6 months	More Info Compare	Save with an ongoing $0 annual fee and 0% p.a. interest on purchases, balance transfers and cash advances.
Virgin Money No Annual Fee Credit Card	Purchase rate p.a. 0% for 12 months, then 18.99%	Annual fee $0	Balance transfer rate p.a. 0% for 12 months, then 20.99%	Amount Saved $927.32 over 12 months	More Info Compare	Save with a $0 annual fee and 0% p.a. on balance transfers and purchases for 12 months. Ends 31 January 2024.

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