The latest lot of banking reforms means that credit card issuers can no longer charge over limit fees, but that could also lead to more declined transactions unless you opt into the service.
Since the start of July, these fees have been abolished for new credit card customers, which means you do not have to worry about factoring in the potential costs when you compare credit cards.
What this change also means is that issuers could become less flexible if you max out your card, notifying you of the exceeded limit and blocking all transactions until you make a payment.
This practise benefits you as a cardholder because it means you do not have to pay an additional fee of up to $35, or the resulting balance.
But you can also choose to opt into an over limit service if the awkwardness of possible declined transactions is something you are worried about.
All you have to do is fill out a simple form with your card details and consent to be charged an over limit fee, and things will basically continue as they did before the reforms.
The Fine Print For The Opt In Option
While the banking reforms give more power to cardholders, issuers can still call some of the shots.
In the case of going over the limit on a card, they may or may not allow transactions to be processed if you do not agree to be charged a fee.
As stated on the consent form from ANZ: “…even if you don’t provide consent, ANZ may still process non-electronic transactions, direct debits or interest, fees and charges in excess of your credit limit, but you will not be charged a fee…”
So the biggest difference between people who do and don’t opt into over limit services could actually be that the latter never have to worry about fees.
In fact, rather than agreeing to be charged a fee, it may be better to simply request a credit limit that will help you avoid maxing out the card.
As long as you are aware of how credit limits work and the ways it can affect your balance, you should be able to avoid going over the limit anyway.
While some people may like the convenience of knowing they can go over their limit without dealing with declined transactions, the costs could add up if you opt in for fees.
But by requesting a limit that reduces the chances of overspending and keeping track of your balance, you should be able to use your card without worrying about blocked charges or fees.
