A lot has surely changed about our lifestyles in recent times! Among these changes are substantial changes to the way we spend. These days, having a credit card is as common as having bank account. But what if the item you want to purchase costs more than your credit limit?
What’s the use of having a credit card if it can’t help when you need it most?
This is what motivated me to share a trick to bypass credit limits so that you can get that promotional offer before it disappears!
Two Minute Version
- Sometimes your credit limit might not be sufficient for purchasing certain high-value items.
- You can apply for a credit limit increase but this might take from a few days to a few weeks.
- One trick to temporarily increase your credit limit is by making an overpayment towards your credit card.
- For example,
- You want to make a purchase of $3,600.
- You have an available credit limit of $2,700.
- You’ll need to pay $3,600 - $2,700 = $900 to do your transaction.
- Depending on your bank, you might not be allowed to overpay or there might be a limit to the amount you can overpay.
- Contacting your card provider is often a good idea – they can guide you better or recommend a different workaround.
Say, you found the perfect promotional offer for a high-value item that you’ve been tracking for months! Say, a laptop/desktop or a cell phone... Or maybe you found flight tickets at an incredible price!
Now, what if the site only allows credit cards for payments and you realize that your credit limit falls a little short of the final amount after the addition of taxes and service fees. Even if the transaction amount exceeds your credit limit by $10, you might not be able to make the purchase. I’ve been there!
Now that we’ve talked about the problem, let’s talk about some solutions!
Don’t buy it unless you actually need it and you’re sure that you can pay for it! The most dangerous way to use credit is to make purchases which you know you cannot pay for. No matter how lucrative a deal might sound, if you can’t pay for it, just ignore it – it’s better that way.
Solution 1: Overpay the Credit Card
A simple, temporary solution to the problem is to overpay your credit card. Simply make a payment towards your credit card in excess of your current balance. This will create a negative balance on your credit card, which you can then use as an extension to your credit limit.
Though many financial institutions often frown upon this workaround, this method should make your purchase without having to wait for a credit limit increase which can often take weeks.
Here’s a scenario to help you understand better.
- You want to buy flight tickets worth $3,600 (including all taxes).
- Your credit card has a limit of $3,000.
- You’ve already used $300, so the available limit is $2,700.
In this case, you’d need to make the following payment towards your credit card:
|Payment required||Amount ($)|
|Amount needed to settle the current balance||$300|
|Amount needed beyond the credit limit, i.e. $3,600 – $3,000||$600|
So, if you make a payment of $900 towards your credit card, your credit card balance will be -$600, which means that the bank owes you $600. Now, you should be able to do the desired transaction of $3,600.
Solution 2: Apply for Limit Increase
Depending on your needs and the amount of time you have in hand, you might want to request your bank to increase your credit limit – either temporarily or permanently.
Temporary Limit Increase
Personally, I’ve never tried this approach because I always choose to get a permanent limit increase. However, from what I’ve heard, it is possible to notify your bank of your intentions to make a big purchase and the bank might temporarily increase your credit limit so that you can do the intended transaction.
Permanent Limit Increase
A permanent limit increase requires a little more time and dedication, but once you get it, it stays for the long-term. If you make big purchases very often then applying for an increase in credit limit can help you a lot.
Depending on your financial institution, you might be asked to appear for a face-to-face meeting before you get a limit increase. The financial institution providing your credit card might ask you for information and proof about:
- The amount and source of your income.
- Any existing claims on your income. Example: monthly rent, repayments of mortgage/loans.
If the bank decides to increase your limit, you might have to sign a new contract for the credit card and related services. In worst case scenario, if your credit limit can’t be increased for some reason, your bank should be able to recommend workarounds.
No other advertisement is as good as a satisfied customer.
However, if your monthly income is not high enough to convince the bank to increase your limit, some banks allow you to block a certain amount of security money in a savings account in return for an increase in your credit limit.
It is quite possible to do transactions beyond your credit limit – either by requesting a credit limit increase or by making an overpayment towards your credit card. If you talk to your bank about your needs, they would be glad to help you find a good solution.