Maxed Out Credit Card Implications

OzFrugie on 30/12/2018 - 23:15
Last edited 30/12/2018 - 23:15

Hi all,

Thanks to recent deals (esp. the ebay GC deals!) I have maxed out my credit card (Amex).
I asked amex live chat support if I can still use Amex while it's over the limit and he said I can still use it.
I asked what is the limit of being overlimit? He said it's based on my "credibility".. whatever it means.

The most concern I have is if going over the limit will impact my credit score, but I was assured by amex that it won't and he made it sound like it's an advantage of being amex card holder.
Does maxing out non-amex credit card affect credit profile/score?

Any ozbargainers have some insights on this matter?
Can I trust this amex guy for the advice he told me as above?

Cheers

Financial Credit Card

Comments

  • CyberMurning on 30/12/2018 - 23:19

    if me i will pay them off (some) so i can use it again.

    • OzFrugie on 31/12/2018 - 00:16

      but i can still use my card… its like 2k over limit now

      • [Deactivated] on 31/12/2018 - 02:17
        +4

        Keep spending, and see?

  • Diji1 on 30/12/2018 - 23:35
    +4

    The more you borrow the more they make at your expense.

  • dcep on 30/12/2018 - 23:44
    +1

    so the credit limit is not a limit and you can actually go over the limit ?

    didn't know that.

    • OzFrugie on 31/12/2018 - 00:17

      yeah didnt know that either. i thought once i go over, my card will be unusable as i see in the movies lol..
      maybe amex thing?

    • jimbobaus on 31/12/2018 - 05:36

      From jan 1 they won’t be allowed to let you exceed your set limit.

      • OzFrugie on 31/12/2018 - 13:53

        New law? Link?

  • KMeister on 30/12/2018 - 23:46
    +5

    Maxing out a credit card will not affect your credit score, If you miss payments or if you increase your credit limit they will affect your credit score.
    Please follow the below link and have a good read at it.
    https://www.moneysmart.gov.au/borrowing-and-credit/borrowing…

  • [Deactivated] on 30/12/2018 - 23:52
    +1

    No impact.
    It will if you don't pay it back.

  • random12 on 31/12/2018 - 01:21
    +1

    Utilisation ( Balance / Limit ) is not yet reported to Australian Credit Agencies. Note: It is reported in the US (which is what most articles on credit scores are based on), and it would have a negative (temporary) effect.

    All you should be worried about is making the payments on time, and getting the balance back down to zero ASAP. And, if you are planning to get a home loan in the near future, make sure you bring down the balances on your credit cards in the few months beforehand.

    There will be no record of this in credit reports, and thus no impact on credit scores.

    • random12 on 31/12/2018 - 01:30

      I am assuming you use the card for the purchase, and then pay off the balance in full at/before the due date.

      If that is the case, you probably should make an early partial payment to the credit card, just to free up the available limit that you want to spend. It is a slight loss in terms of missed interest free days where your payment could be earning interest elsewhere, but that's not really that big a deal. Also, I have heard that Amex is particularly strict around credit risk policies ( Not sure if it applies in Australia, but I have seen articles/videos saying that they will freeze your account and require you to submit documents to get it unfrozen, if they detect strange behaviour, e.g. overlimit). Search 'Amex Financial Review'

      The things you should be worried about are the Overlimit Fees, and the potential for your account to be frozen for a few weeks (which stops points earning).

      Strange part is that you are asking a bunch of strangers whether or not to trust the Amex guy (which presumably knows correctly). You can keep using the card, but don't be surprised if at some point the card is declined or account is frozen for a period.

  • bobbified on 31/12/2018 - 02:18
    +3

    Do you have an Amex charge card (with no specified limit) or is it an actual credit card?

    Their charge cards have no limit - as long as they think you can pay it off that month, they don't care what you spend.

    • OzFrugie on 31/12/2018 - 13:56

      Pretty sure it's normal credit card. I dont even know what amex charge card is. My card has a limit although it seems that my card still works even after exceeding the limit

      • bobbified on 31/12/2018 - 14:09

        The Charge Cards are the ones with the picture of the head on an oval right in the middle of the card.

        • OzFrugie on 31/12/2018 - 17:07

          Interesting. Never know this exists. Though it seems no charge card with no annual fee?

          • bobbified on 31/12/2018 - 17:17

            @OzFrugie: The charge cards do have an annual fee. The Platinum charge card costs over $1000/year, but comes with benefits and a platinum credit card (with no annual fee) too. I'm not sure about the gold charge card one though.

            • OzFrugie on 01/01/2019 - 15:51

              @bobbified: Which one is the gold one? From amex website, i can only find 1 charge card ie the platinum one which comes with 1450 annual fee..
              I like the concept of charge card bcoz i always pay in full monthly anyway but not willing to pay for outrageous annual fee

              • bobbified on 01/01/2019 - 16:14

                @OzFrugie: Sorry, my bad - I just had a look at the Amex website and a few forum posts - it seems like they've stopped accepting applications for the Gold and Green Charge cards. The platinum card is the only Charge Card that you can apply for. Note the minimum requirements.

                You can get $1450 worth of travel benefits if you're a frequent traveller, relatively easily.

  • aaruu on 31/12/2018 - 03:22
    +1

    With the new comprehensive credit reporting in place, past 24 months payments (on time, late, not required) are being reported by some financial institutions already, more to follow suit. Payment amounts or over limit aspect, I have not noticed in my Equifax Premium membership, it seems still out of scope.

    As others have mentioned, increasing credit limits, new credit applications (approved or not), and credit accounts closed is likely to have a direct impact on the credit score. Don't miss any payments, that's key.

    Also, any amount you are over limit by, be prepared when the next billing cycle statement is issued, that is likely to become due immediately + a monthly minimum payment. Happy saving!

    • OzFrugie on 31/12/2018 - 13:58

      Off topic.. Does closing credit card account improve credit score?

      • HardlyCharly on 31/12/2018 - 14:45
        +1

        It doesn't. You need to have and use credit to improve your score. It's a bit counter-intuitive, if someone has always saved responsibly and paid for purchases in full and they decide to take out a loan they'll actually have a lower score and less borrowing power than someone who has been irresponsible and always lived above their means (as long as they made their minimum payments on time). Popular advice is to use a credit card for everyday expenses and pay that off rather than using a debit card as that way you build credit and improve your score.

      • aaruu on 31/12/2018 - 21:40

        Credit files now reflect total credit card limits which some people earlier use to partially lie about when applying for loans. Most institutions have opted in and other small lenders would eventually join in to share this info.

        Closing credit card primarily reduces that overall credit limit and enhances borrowing capacity. One of my mates in fin. sector did mention credit card closure had some relation with credit score, but not sure what exactly, sorry. Logically, credit score & closure don't cross paths other than reflecting that one is not credit hungry/ desperate.

  • pantsparty on 31/12/2018 - 07:50
    +1

    Just checking - you plan on paying the card back in full right?

    • OzFrugie on 31/12/2018 - 13:59

      That's the plan

  • Topdog on 31/12/2018 - 09:15

    With my credit card provider, If I go over my limit, I get a $30 fee per statement cycle, also the credit that is over due is charged interest on a daily basis. No it wont impact you score or credit file. it will hit your pocket though. wait to you get your next statement. You will see :)

  • JimmyF on 31/12/2018 - 09:23
    +1

    When your statement arrives, you'll need to make FULL payment on anything over your credit limit, and then the min payment required as per normal.

    So above you say you're $2k over, so you'll have to pay $2k + min monthly payment.

  • Almost Banned on 31/12/2018 - 10:41

    This sounds rather like a breach of the responsible lending provisions of the National Credit Act.
    If they have assessed your credit worthiness and given you a credit contract with a limit based on that assessment, allowing you to exceed it with impunity is likely to be irresponsible and possible unconscionable.

    • chumlee on 31/12/2018 - 10:43

      Charge card not a credit card most likely

    • OzFrugie on 31/12/2018 - 14:03

      What if amex calculates that they are happy to give x+10,000 credit but i only apply for x for my limit?
      In this case, i think its not irresponsible for them to allow me over the limit by few grands i suppose?

      • Almost Banned on 31/12/2018 - 15:12

        Would you feel the same way if you had established a limit on your spending at a casino - and the casino allowed you to substantially overspend your limit, even though you may have the funds?
        I still think it is irresponsible lending. If I set a limit, I expect it to be kept.

  • barbarella on 31/12/2018 - 11:25

    …but can you trust us??

    • OzFrugie on 31/12/2018 - 14:00

      You tell me

  • jsb on 01/01/2019 - 11:23

    It's not just Amex. My Coles mastercard also does the same. Just a few days back, I was 500 over the limit

  • Never Pay RRP on 21/01/2019 - 19:59

    Be careful and read the T&C. Some have a fee for going over your credit limit, even though they allow you to keep spending

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