RBC VISA Policies: Watch Out for “Overlimit Fees!!”


I was looking over a good friend’s finances for them and noticed a “$20 overlimit fee” on their Visa bill.  I then confirmed from their bill that they had total charges that actually exceeded their credit ‘limit’ from purchases made over the one month billing period (my friend pays the full balance every month).

I asked my friend if this ‘fee’ had ever been discussed with them, and confirmed that this was not the case.

This bugs me for a lot of reasons, not the least of which are:

  1. People usually assume that they can’t exceed their limit, so if they use their limit to help them keep their credit card spending in check, this will no longer work.
  2. $20 is a way for the credit card company to make money without charging you interest.  You ever wonder why credit card companies interest rates are just under 20%?  Its because they can’t get away with charging more legally.
  3. They didn’t ask the user if they wanted this feature.
  4. If someone loses their card, the potential damage is MORE than their credit limit.
  5. This is just another example of the card companies taking advantage of people that are bad with money.

When I called Visa to tell them what I thought of their policy (and get the charge reversed) they blamed the need for this policy on the fact that their systems don’t post items right away, so people can go over their limits.

I explained to them that this was a new policy, so this didn’t make sense for one, and two, customers should not have to suffer because of their bad systems.  They then informed me (confirming their lie) that they could set the card to work in the manner that people expected where you would just get the card declined when you tried to go over your limit.

So you might want to call up your card company and find out what your card ‘settings’ are…

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11 Responses

  1. Thank you for your advice! I’ll follow it.

  2. Actually….

    I have gone over my limit and payed fees in the past, but…. Why is your credit card company in business, to let people use their money for free? If you pay your full statement balance every month, then where does your credit card company make money on your account.. yup..fees… lots….
    They do so because people can be idiots…
    they dont read, they dont read their bills, they dont read their contracts, nor their calenders.
    When you call your credit card co.:
    1) Dont call Visa or Mastercard, they arent your bank.
    2) Dont ask what the late fee is for… because your
    payment was late.
    3) Know your credit limit. Duh.
    4) Yes, they can charge you over 20% legally.
    5) Mess up and they will.
    6) Their lies…..

  3. Thanks Andrew,

    I agree with most of your points, but just to be clear, the credit card companies make a LOT of money even off people who pay their bills every month.

    Depending on the card, the retailer agrees to pay between 3-5% of the purchase to the credit card company. This is why many retailers (particularly of computer components) quote cash prices, and add 3% if you want to pay with credit card.

    I believe one of the reasons why lots of places don’t take AMEX is because they charge closer to 5%.

    It is also this system that allows the credit card companies to offer 1% back programs to give you incentive to use their cards more (otherwise they would be losing a lot of money right??).

    It does really bother me how banks seem intent in putting people that are not knowledgeable about money into really bad positions.

    A.

  4. 1. the overlimit pad and the fee is actually in our cardholder agreement.

    2. the $20 overlimit fee will only hit the account if the balance is overlimit when the statement day hits. and visa cards can go well over 20% interest. just look at the RBC brithish airway card

    3. it is not an extra risk when you lose your card cause rbc visa cards come with purchase security that dose not hold the cardholder reliable for transactions not made by the cardholder. (accept cash advances but then again u have a day to day limit for that.

  5. The whole “making a purchase and going over the limit” thing really irked me too. I thought they only charged it if interest charges put you over the limit (since that means that YOU forced them to loan you more money than intended) while declining everything else.

    I called in to get the fee reversed, successfully. The key was the word “cancel” 😉

    The whole call took about 8 minutes, but I think I could’ve cut that in half if I had used the key word earlier.

    I got them to do the same thing: Decline future purchases that would put me over the limit. I have multiple cards anyway.

    armleuchter: Point #2 is only valid with some credit cards, others, like the TD Visa, charge you if you go over the limit at any time.

    And the interest rate limit in Canada is actually 60% under the criminal code.

  6. […] RBC VISA Policies: Watch Out for “Overlimit Fees!!” September 2007 5 comments […]

  7. I was surprised that RBC Visa would do such a low level attack on seniors and people who don’t actually check their statements and to think that these people–are people who trusted the bank for doing the right thing. There’s no denial that people do overuse their cards and would go over the limit, but for the bank to issue a minimum payable amount which is below your overlimit amount, not warning them and yet charging them $25 for going over the limit is disgusting. A Senior I worked with was so worried about her finances so she decided to ask me for help. Apparently, on top of the overlimit fee of $25, she was also charged another fee called Balanced Protector Service Charge that increased further her overlimit amount. We phoned RBC Visa, spoke to a CSR, got both overlimit fee $25 plus the balance protector service charge waived. I got curious so I went through her previous statements. To my surprise, I found 6 to 7 consecutive $25 monthy overlimit charges in her account. All of these statements have indicated minimum payment amounts which are way below the overlimit amounts. Although she was religiously paying her minimum payable, she wasn’t really paying enough to get rid of her overlimit amount. We phoned RBC Visa again and spoke about the anomaly in the way they issue their minimum payables. The CSR refused to waive the other overlimit charges and had actually disputed that the company was following the contract agreement. The contract has indicated how the minimum payable is being calculated and people have signed and agreed to the contract. Is this legal? How can we collect all of these overlimit charges back? This sounds really more like a scam to me. The seniors are so vulnerable in this case.

    • While it would be nice to think that all seniors had a ‘Kate’ in their lives to keep an eye on these things, we know it isn’t true. With so much money involved, it is hard to believe that the card companies will change their ways.

      Legislation is probably the best approach, and starting with seniors would probably get a lot of popular support. Nobody wants to think about their grandparents getting ripped off!

  8. Here’s another something to chew on for “overlimit” fees. I had a visa with a maximum credit limit – knowing I might be able to go a bit over I tried to be careful to keep it under. Unbeknownst to me, the bank (and a specific vendor) have the ability to “force” a charge through. On my $4000 limit they pushed through a charge of over $26,000 (yes, six times my credit limit), now are demanding payment of that (still disputing it), and charging outrageous fees.

    I get people going a bit over their limit, but six times seems a bit much.

  9. First of all the access of going over limit is a protection from embarrasement at the POS terminal and if there are pre auth services trying to access funds and are not able to can charge u up to 45$ in NSF fees from that service provider. Also if all the available credit it gone, interest needs to be applied somehow. If you happen to pay the obverlimit fee it increases your credit score with the credit bureau , showing them your need for money. And it shows the willingness to pay back more of what you should have never even spent in the first place. Removing the possibility of going overlimit is an option.

  10. I get trying to prevent “embarrassment” at the terminal, however when a $35 purchase is declined, and then a month later (after payments and such) a $25 purchase is declined, yet a TWENTY SIX THOUSAND dollar charge is ok’d? Sorry – that’s just way too fishy.

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