Can you go over your credit card limit?

Whether you can go over your credit card limit or not depends on your credit card provider’s systems and policies. So if you try to make a purchase that exceeds your credit card limit, it may go through (although some penalties may apply) or it might be declined outright.

Let’s look at the possible outcomes if you were to go over your limit, the potential consequences, and why it’s important to avoid it happening altogether.

Credit card limits: a quick recap

Each credit card comes with a credit limit, which is the maximum amount of money that has been approved by the lender to be borrowed on that card. This amount is determined by the lender during your application. Keep in mind that if you go over this limit, you’re breaching the terms of your credit agreement, and there are usually consequences for doing so.

When comparing different credit card offerings, it’s important to remember that the limit you’ll see before being accepted is the advertised credit limit. This means that, as with the advertised representative annual percentage rate (APR), a lender may offer you a different limit after assessing your credit card application. If your application is approved, the limit that you’ll be offered is determined by your individual circumstances.

What happens when you go over your credit limit?

If you make a purchase that takes you over your credit limit, it’s possible that your credit card provider may decline the transaction. And if your card issuer does approve the transaction, some consequences may apply. These can include:

• Penalty fees. Your card provider may charge a penalty fee of around £12 (the amount advocated by the Office of Fair Trading in 2006, a recommendation still in use by many lenders).

• Losing promotional offers. Exceeding the credit limit could make you lose out on any promotional offers that came with your card.

• Less favourable terms. Your credit card issuer could raise your interest or even lower your credit limit going forward, as lenders may consider it riskier to lend to you.

• Card blocking. Some credit card issuers may block your card for exceeding the credit limit until you can reduce or settle the balance.

Exceeding your credit limit can potentially have long-term effects on your borrowing prospects. This is because lenders can see your credit limits, how often you get close to or exceed them, and any outstanding credit card balance you have when they check your credit report.

Consistently maxing out your credit limit, or coming close to doing so, can signal to lenders that you’re relying heavily on borrowing, which can leave a dent on your credit score and future lending opportunities. This is because lenders need to make sure that you’re able to afford your repayments – if your repayments are already high, it may suggest you wouldn’t be able to cover a further credit allowance.

While the information about exceeding your credit limit (or coming close to) won’t remain on your credit report forever, it can negatively influence your borrowing prospects for the near future. So managing your credit responsibly – which entails staying under your credit limit and consistently making repayments on time – is the best way to avoid these potential consequences.

How much of my credit limit should I use?

When trying to determine how much of your credit limit to use, referring to your credit utilisation rate – the proportion of the available credit that you use – is a good practice. A credit utilisation rate of around 30% is generally considered beneficial.

A low credit utilisation rate signals to lenders that the borrower isn’t too reliant on credit and can easily make their repayments when they fall due. Making your repayments on time and regularly paying your credit balance in full shows lenders that you can borrow responsibly. These positive behaviours contribute to boosting your credit score.

If you’re unsure of your credit limit, it can be found on your credit card statement or listed in the terms and conditions of the credit card’s paperwork. You can also contact your lender directly if you are unsure or need help understanding the terms of your agreement.

5 tips to help stay under your credit limit

Know your limit. It might sound obvious but if you don’t know what your limit is you won’t know when or if you’re going to go over it.

• Being mindful of additional charges. It’s not just purchases that can take you over the credit limit – interest, balance transfers, and other fees also contribute. Keeping an eye on your balance throughout the month can help you stay under your credit limit.

• Setting reminders. You could also consider setting up alerts that let you know when you’re close to your limit to avoid exceeding it by mistake.

• Consider direct debits. Regular monthly repayments done by direct debit can help avoid late or missed payments.

• Applying for a limit that works for you. Having the right credit limit for your financial needs can help avoid unaffordable borrowing.

Credit limit FAQs

1. What information influences my credit limit?

As part of your application for a new credit card, the provider will require the details of your income and monthly expenses. They’ll then assess your borrowing history based on information from any existing accounts you have with them and your credit report.

Credit reports are collated by the credit reference agencies (CRAs) and contain information specific to how you’ve managed your credit across all lenders. Credit card providers consider the details of all your existing credit commitments, your available limits, and how much you spend on each line of credit. They’ll also be able to see if you’ve made repayments on time, any record of missed payments, court records listed in your details, or if you have no borrowing history as of yet.

2. How is my credit limit determined?

Using a combination of the information mentioned above and their own criteria, the lender will offer you a credit limit that they believe you can afford.

Clients with long-standing accounts and evidence of responsible borrowing will typically qualify for higher credit limits and lower interest rates. Borrowers with an adverse credit history are more likely to be offered lower credit limits and higher interest rates. This is because a history of poor credit management suggests a higher likelihood of repayments being missed.

With this in mind, it's never too late to start building a positive credit history, and staying under your credit limit is one step towards that goal.

3. Can I increase my credit limit?

It’s possible to increase your credit limit, provided your lender agrees. You can request a credit limit increase from your card provider, often by simply logging onto your internet banking.

4. How long should I wait between applications?

It’s generally best to wait a while between applications for credit – when it comes to limit increases, your lender will usually want to see a few months of positive repayment history before approving your application.

Some card issuers and credit reference agencies recommend waiting between three and six months before reapplying after having a credit application rejected.

Keep in mind too that when you request a credit limit increase, credit card providers may conduct a hard credit check – and having too many hard checks in a short time period could have a negative impact on the outcome of any further applications you make.

Summary: Can you go over your credit card limit?

Exceeding your credit limit often leads to one of two possible outcomes: either your card issuer blocks the transaction, or it’ll go through, and some consequences may apply. These could include a penalty fee, losing out on promotional offers or favourable terms, or even having your card blocked.

In general, it’s beneficial to keep your credit utilisation rate at around 30%. Maintaining a credit utilisation rate close to this can be a positive indicator to lenders. It shows that you are in the habit of borrowing responsibly and are able to manage your credit well, without overly relying on it.

Take your credit health into your hands

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