The credit card overlimit facility allows eligible cardholders to make transactions beyond their approved credit limit, subject to several stipulations and regulations requiring approval from the respective credit card-issuing financial institution. According to reports from Mint, this temporary service provides short-term flexibility when immediate funds are required, particularly during challenging times such as medical emergencies, travel requirements, or urgent home repairs. The facility is not a permanent increase in spending capacity but rather a temporary solution for genuine emergencies.
Credit card overlimit fees across major Indian banks generally range from 2.5% to 3% of the over-limit amount, subject to a minimum fee of ₹500 to ₹600. As reported by Mint, all over-limit fees are subject to an additional 18% GST. The facility remains valid until the excess amount is repaid, and cardholders should be aware that overlimit transactions may attract fees, taxes, and interest charges that increase the overall cost of borrowing.
Exceeding the credit limit can significantly increase the credit utilisation ratio, which may negatively affect the credit score. According to Mint, such behaviour can reflect poorly on the credit profile and bring down the credit score if payment obligations are not met on time and credit utilisation remains high for extended periods. Regular dependence on the facility may indicate poor financial planning and could make future borrowing applications difficult to clear.
The facility should be used only during genuine emergencies such as medical expenses, accidents, urgent travel requirements, or necessary purchases that can be repaid on a short-term basis. As reported by Mint, it should not be used for discretionary spending, impulse purchases, or recurring expenses that regularly push spending beyond the card limit. Before using the facility, cardholders should ensure they have a clear repayment plan to avoid accumulating interest and debt, and explore alternative options such as increasing the credit limit, obtaining lines of credit, or taking a personal loan.
