17

I got a RBC Visa in Canada which I continued to use trusting that I could never go over my limit (except maybe $100 over as stated by a teller to me when I asked why was I able to go $1200 over).

So my issue is: I need to use my card for travel but I cannot afford to pay $1200 just to get back down to my limit and then pay another $2000 just to use my card for my needs.

The teller refused to raise the limit so I can use my card sooner. What can I do? Anything to convince a manager? Another thing is I can't raise my limit the usual way as I do not qualify.

  • 60
    If you can't afford to pay off the charges, you really should not have made those purchases. It's a bit late now to fix this. Reschedule the travel for after you have paid down the card. – keshlam Apr 2 '16 at 11:43
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    You should never be near your limit in normal circumstances, partly so you have space on an emergency and mostly because it means you're paying a huge amount of interest. – keshlam Apr 2 '16 at 14:19
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    If you weren't aware you were near your limit you weren't paying attention to what you spent. – Loren Pechtel Apr 2 '16 at 19:07
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    @verve That's fine if you have plenty of cash lying around, but why would you ever use it like that when you can't afford to pay it off? If your answer is that you can pay off 2K but not 3.2 then you need to seriously reconsider the way you handle money. – Lilienthal Apr 2 '16 at 21:32
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    @Nayuki Visa does not decide your credit limit. The bank that issued the credit card does. The teller will not personally be responsible for deciding whether your limit can be raised (likely a computer algorithm will make that decision really), but it is the bank and not the payment network that decides. Of course, it is unlikely any bank will raise your credit limit because you've already exceeded it and don't have any more money, as lending money to people who have just indicated that they will have trouble paying it back is bad for business. – Zach Lipton Apr 3 '16 at 6:09
82

Credit card limits are, for the most part, soft limits; sometimes, a credit card will allow you to charge a little over your limit. The large amount they allowed you to go over your limit is unusual, but not unheard of.

It is your responsibility to keep track of how much you charge on your credit card, not the bank. Just like with a checking account, you are supposed to keep track of everything you charge so that you always know how much you have spent and can pay it off.

Raising your limit will not help your problem; it would only make it worse. You have already charged more than you can afford, and they have already effectively raised your limit by $1200.

I realize that this situation is tough, but fortunately, you have a learning opportunity here. I recommend you resolve to stop using the credit card in this way, and work toward paying off your debt to zero. At that point, treat your credit card as if it was a debit card, and only charge what you already have in the bank to pay off right away. (Or, just use a debit card and get rid of the credit card.) Learning to do this now will save you lots of money in interest.

If you don't learn to do this, you will find yourself in even more debt in the future, and it will be even harder to dig yourself out.

If you need some more help on getting out of debt and learning to budget your money, I recommend the book The Total Money Makeover by Dave Ramsey.

  • 73
    @verve The credit score is not your problem. (As soon as you pay off the credit card, your score will bounce back to where it was before you maxed out your card.) Your problem is out-of-control finances. You had no idea how much you were spending until the bank cut you off. That is the problem that needs to be addressed. Increasing your limit would only make the problem worse. – Ben Miller Apr 2 '16 at 13:59
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    "you are supposed to keep track of everything you charge so that you always know how much you have spent and can pay it off" - Agreed, 100%. In a perfect world, one would know their natural spending, gas, food, phone, cable, and that monthly card average would be a small fraction of available credit, and far smaller fraction of their liquid checking balance. – JoeTaxpayer Apr 2 '16 at 15:59
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    I want to upvote, but it's poor advice to close a credit account. It's much better to simply learn how to be responsible with your credit. Closing the old account entirely can negatively affect your credit. – RubberDuck Apr 3 '16 at 19:12
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    @RubberDuck, it's poor advise in normal conditions to close a credit account. It's awesome advise to someone that obviously doesn't know how to use a credit account. A secured card may be a better option here. – coteyr Apr 3 '16 at 23:21
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    @verve To be quite frank, credit scores are designed precisely to help banks determine whether someone is in a high-risk situation like yours so that they can avoid lending to them. The situation you describe is exactly what they're looking to avoid. – reirab Apr 4 '16 at 15:07
19

Unfortunately, this is a customer service issue. The bank has a set of term and conditions (Ts and Cs) which you received with the card or when you applied. It included your limit, and what happens when you go over, likely, a penalty for going over the limit. At the very least, they expect you to pay the overage or you'll see an over-limit charge next cycle too.

In the future, I'd suggest checking your account on line to monitor your balance. Some accounts offer an alert email, mine will let me set an alert for when my balance goes over $xxx, which is helpful, as I can send in an early payment to bring that balance down.

It still never hurts to ask. They might waive fees if any, if this is your first time. You can still try calling them, explain the odd timing, and see if you can get a temporary increase in credit line.

In the end, you need to review your finances. Carrying balances month to month at 12-18% is no way to have a successful financial future. It's one of the first things to getting your situation under control. After that, a small savings account, an emergency fund, is the next step. One month of charges should never put you in this bad situation.

  • Who has the power to temporarily change the limit? Do I call Visa or go to the bank that issued me it? – verve Apr 2 '16 at 13:12
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    @verve The bank is the one who checks your credit and determines your limit. – Pedro Apr 2 '16 at 14:12
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    @Pedro It would be the bank. Their number should be on the back of your card. That said, it's extremely unlikely that they'll raise your limit when you already have more than you can afford to even get under the limit on the card. Quite frankly, it would be irresponsible of them to raise the limit in the circumstances you've described. – reirab Apr 4 '16 at 14:53
16

Unfortunately, the only thing you can say is "Here have $1,200." You need to start living inside your means. If you are not making as much money as you once were, then you need to stop spending money.

You should cancel your travel, and really look at your expenses to see what you can cut. You need to pay off the entire credit card then decide what you wan to do with it.

You should never spend more on a credit card then you actually have in the bank. If you have a credit card with a $500 limit and $10 in the bank, feel free to spend $10, but under normal circumstances, you should not spend the other $490 as you do not actually have the money.

I recommend using "envelope budgeting" like yNAB, to get your expenses back to an amount you can actually afford to pay, and to pay off this debt as fast as you can, even though it may mean ramen noodles for a while.

  • 4
    You should never spend more on a credit card then you actually have in the bank. I disagree, a credit card helps with cash flow; you can spend whatever you usually spend on a daily/weekly/monthly basis, but you can spend it before you have the cash on hand. Typical example, travelling to work before you're paid for that work. – James Apr 4 '16 at 10:05
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    @b3njamin, that is an extremely risky gamble. What happens if work doesn't pay you? It's far better to have the "gas money" in the bank, then use the card for the "perks (points/miles)". In essence, they can be great in the case of an emergency, but there is no reason you should help cause the emergency. Only rely on money you actually have, and not money that you may get in the future. To be clear I am not saying don't use a credit card, I am saying make sure that your credit purchases are backed with real money you already have. – coteyr Apr 4 '16 at 10:11
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    We obviously have very different views on what's extremely risky! How do I get to work without gas money/train fare? Generally, a contract would protect me against non-payment and any 'damages' thus caused. I'm well aware I'm playing devil's advocate here, but it's an interesting difference of opinion all the same. – James Apr 4 '16 at 10:17
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    True, it's just differing opinions. But I have seen many people get in trouble by spending $300 on Xbox and Cred carding their Gas only to find out that their pay check is further out then expected (say direct depot slip up, means have to cut a check and that takes 3 days in the mail). Better to only spend $250 on Xbox and keep $50 in the bank, then spend $50 on the card that way when that three day wait kicks in you still have $50 to work from. (of course totally fake numbers). But as you say, difference of opinion. That said, no money to get to work qualifies as an emergency..... – coteyr Apr 4 '16 at 10:23
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    If you have no money to get to work under "normal" circumstances, then you need to re-do you budget and allocate more money for getting to work. – coteyr Apr 4 '16 at 10:24
10

Several answers already addressed the issue that you wouldn't want to get into this situation in the first place, but looking forward the problem is that you want to spend 2000, whilst you don't have it (or at least not 3200).

Besides finding a way to get more loans/credit than you already have, you can consider whether you could survive without spending the 2k in question.

  1. If your trip is for work, ask your boss/client to front your expenses
  2. If your trip is for a critical life event (funeral, wedding of direct relative), consider asking relatives for help (money, accommodation, transportation...)
  3. If your trip is for pleasure, either get a better job so you can afford it (or at least get credit for it), reduce your travel budget, or cancel it. You may even be able to get some costs back like hotel bookings.
  4. Depending on where the money went, you may even be able to get back a significant part of the 3200 by returning made purchases.
4

One possibility is to ask RBC to lend you some money (or more specifically, to lend you some more money): an overdraft, a personal loan, or whatever.

To discuss this you should to talk to your personal banker (not a teller), probably by appointment: to explain why you want it, and how and when you expect repay it.

You might (I don't know) say that you want the loan (or some of the loan) to pay off the Visa, and/or for the travel.

If you've only just arrived in Canada, however, then I don't see why they should want to lend it to you (i.e. why they should think you're a good credit risk). Is there anyone else (e.g. an immigration sponsor or parent or employer) who might co-sign (a.k.a. guarantee) the loan?

I have never had this issue before with any other credit cards but I got an RBC Visa in Canada

In some countries (not Canada) a Visa behaves more like a debit card, i.e. you can only spend money you have in the account.

  • 3
    They apparently thought he was a good enough credit risk to lend him over $3200. Canada actually has both normal Visa credit cards and Visa debit cards that are tied to a bank account. Switching to a Visa debit card might be a good long term solution to prevent this from happening again. It probably wouldn't work as a short term solution for travel though. – Ross Ridge Apr 3 '16 at 3:04
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    Good point: an official loan, even a "signature loan", will have a much lower interest rate than the credit card. – JDługosz Apr 3 '16 at 6:10
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    @verve They don't normally lend to the unemployed but they don't normally give credit cards to people without jobs either. If you've lost your job since getting the card then you probably won't be able to get a loan. If you obtained a credit card without a job then you must have some other source of income and that might be enough for a loan. – Ross Ridge Apr 3 '16 at 8:26
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    @verve if you're unemployed, maybe a trip that you can't afford isn't the right answer at the moment? :/ It's definitely not the fun answer..... but it very well might be the right one :( – Patrice Apr 4 '16 at 13:34
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    ^ This. If the bank clerk has any sense of responsibility, they won't loan you more money. You're obviously not managing your finances properly, and to be in that situation when you're unemployed, too... not cool. Lending you more money to travel would just be irresponsible. It's the sort of thing that makes people homeless, and led to the 2008 crash. – Lightness Races in Orbit Apr 4 '16 at 17:09
4

Credit is not free money. The idea is you will repay all of it, within a reasonable amount of time. It is abundantly clear you either don't really understand this concept or completely failed at planning for it. Or even at keeping up with how much you owe - you are curiously blaming the bank for letting you go over the limit. The reason most banks will authorize that for credit customers is they don't want to strand people in some sort of an emergency situation.

I'd recommend you cut back on your spending and work on paying the balance down. If you have been charged any over the limit fees you can attempt to negotiate getting those credited. Most banks will compromise on that the first time.

I don't really recommend it, but if there are some circumstances surrounding this that are temporary and you are very confident about being able to manage money better in the future - chances are you might be able to get approved for another card. If you otherwise have had some good credit history and this situation is very recent, it may not even show up on your credit report yet and another bank might happily approve you. They may even offer a low or zero interest (for some time) balance transfer deal, which you should use to get the other card within the limit.

If that ends up working, it's very important that you keep in mind having dodged the bullet once doesn't mean you will ever be able to do it again. Get your budget in order and pay things off.

  • Got rejected after applying for 5 cards. – verve Apr 3 '16 at 17:01
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    @verve Not surprising. Your credit utilization is over 100%! – Daniel Apr 3 '16 at 20:44
  • Perversely, if you did manage to pay off the card, you would qualify for even higher credit limits because of the high utilization. – mckenzm Apr 4 '16 at 18:27
3

Sounds like you are stuck. These are your options:

increase limit

Not going to happen. You said you don't qualify. You also won't convince them to let you access more borrowing power by arguing that you can't pay now. No responsible lender would take that bet.

negotiate balance

Unlikely. This sounds like mostly real debt, not fees. They generally won't write off real debt except if you are in default. They will only negotiate if they think you can't pay. Note that this will probably hurt your credit, as they will report that you didn't pay your debt.

pay down balance

This is your best and only real option. If you can't afford to pay down the balance you can't afford to borrow more.

I am sorry for your situation; it is frustrating. I know how that feels. It is a textbook example of the risk associated with debt. Even if you plan to pay the balance every month, when the unexpected happens, you pay the price.

3

Get a debit Visa Card and load it up. Be aware you may not be able to use it for check in. You could then use the maxed out card to check in, but pay with the debit Visa. You will still need to be solvent, you are still going to need to pay as you go.

  • Interesting solution to the short-term travel needs. It does require putting enough on the card that it satisfies the hotel's hold yet covers your other non-cash expenses.. On the other hand it means not paying down the original account, and continuing to pay worst-case interest on that, and the question of where to get the money remains open. – keshlam Apr 2 '16 at 22:10
  • Actually, the good thing about this approach is that it would let verve cut up the credit card to prevent any more charges from being made for a while, and force living within a cash budget. Which is not a bad idea even if the trip is cancelled. – keshlam Apr 2 '16 at 22:16
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    But. OP doesn't have the money to begin with. And if he had $1200, but doesn't pay down his card, there will be penalties and interest each month. – JoeTaxpayer Apr 4 '16 at 12:41
0

Everyone is telling you how to manage your finances, good for them that's not an answer to your question. The real answer solves how to get your money to travel. The bank likely might extend you a loan especially if you have assets greater than the amount borrowed. However, a better solution (or alternative if the bank's rate are too high or they simply won't give it to you) is to go to a P2P lending platform these are copious in the UK and US. If I remember correctly there was a Canadian platform called CommunityLEnd or FinanceIT. The point here is this: Go borrow money at a lower rate than your credit card (there are other alternatives than P2P, you can google these, just make sure the rate is lower than your credit card). Pay the card off, and go on vacation just make sure you can pay it all off eventually otherwise you'll be swimming in debt you cant pay.

  • 1
    CommunityLend doesn't exist, it became FinanceIt. FinanceIt doesn't do P2P loans. – ChrisW Apr 3 '16 at 11:54
  • I tried to apply for a 0 interest card from Mbna:they said I don't have enough revolving credit. – verve Apr 5 '16 at 7:36

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