It seems that the portion of your charge that does not go over your limit will be charged to your PayPal credit and the remaining amount would go to your backup source. You can cancel the order with the merchant or return the item for a refund if it's that much of a financial burden for you. I was once declined the purchase but not because I went over my limit. There was an issue with the site and it declined my purchase but it didn't tell me that the PayPal credit was declined. It approved the purchase using my backup source. I didn't know this right away. It was two days later when I looked at my bank account. I called PayPal and they recommended that I remove my bank account as backup funding and only use my PayPal credit as the funding source or open a new PayPal account only using my PayPal credit as a funding source. I did just that so now I don't ever have to worry about my account being used without knowing because my only funding source is PayPal credit. You could try that and open a new account to use for eBay and money transfers, etc.
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