When you first got your credit card, you probably got a credit limit of $500 to $1,000, depending on the type of card and your credit score. At some point, you may decide you want or need more credit. Sometimes, the credit card company will increase your rate without you asking for it. But what if that doesn’t happen and you need more credit? Let’s find out.
What are the advantages of having a higher credit card limit?
It’s better to have fewer cards with higher limits than to have lots of cards with low credit limits. More cards mean more annual fees, and it’s harder to keep up with all those minimum monthly payments. Consider getting a higher limit on your best cards, and letting some of those low-limit cards go.
It’s better to have fewer cards with higher limits than to have lots of cards with low credit limits.
There are several reasons why you might want to raise your credit limit. For example:
- You might need to make additional purchases but you don’t have enough credit to cover those items.
- You might want to increase your credit limit so that your credit utilization is a lower percentage. For example, if you have a credit limit of $1,000 and you have charged $800, your credit utilization is 80 percent. But if you raise that limit to $5,000, your credit utilization becomes just 16 percent, without paying the balance down at all. This low utilization gives you a higher credit score.
- You may want to earn more rewards. Many credit cards come with rewards, such as lodging, airline expenses, car rentals, etc. A higher credit limit lets you spend more on your card. When you spend more, you get more rewards.
How much of an increase should you ask for?
Ask for a 10 to 25 percent increase in your credit card limit. Asking for less than 10 percent isn’t worth the time it takes to get a raise approved by your company. Asking for more makes it look like you are desperate for money. Credit card companies are afraid to lend too much money to desperate people.
Asking for too much of an increase in your credit limit raises a red flag with the credit card company. They may worry you’re going to charge a lot of money and then default on payments. But if you’re going to go to the trouble to ask for a raise in your limit, ask for enough to make it worth your while. Consider asking for a raise of about 10 percent to 25 percent of your current credit card limit.
Ask for an increase right after your six-month or one-year anniversary. If your request gets declined, you will need to wait about three months (one fiscal quarter) to ask again.
How soon can you ask your credit card company to increase your limit?
Ask for an increase right after your six-month or one-year anniversary. If your request gets declined, you will need to wait about three months (one fiscal quarter) to ask again. Most credit card companies review their accounts every six months. So, if you’ve had your card just under six months to one year, wait until that anniversary rolls around if you can. They might raise your limit and you won’t even have to ask.
How should you use your credit card to increase your limit?
You can write to your credit card company at their physical address, or you can send them an email or contact them by phone. Just keep track of when you communicated with them and how for later reference. This will keep you from requesting another raise in your limit too soon.
There are two ways to give yourself a good chance of getting your credit card company to increase your limit. First, use your card often. The more you use it, the more likely they are to give you a raise in your limit. Second, pay on time. If you start to fall behind on your payments or pay late, it will hurt your credit and reduce your chances of getting a higher credit limit.
Which credit card should you request an increase on?
You don’t want to request a raise from all of your credit card companies at one time. Just ask for a limit raise one card at a time. Asking for a limit raise on multiple accounts is another red flag for credit card companies. Each credit card company will automatically pull your credit history for review before issuing a limit increase. If you get multiple hits on your credit in a limited time, it will hurt your credit score and lower your chances of one of your companies giving you a higher limit.
Asking for a limit raise on multiple accounts is another red flag for credit card companies.
Choose your best card to request a limit increase on. How do you know which is your “best card”? Ask for a raise from the card with the lowest interest rate. A higher limit can mean carrying a higher balance each month. You will want to carry a higher balance on the card with the lowest interest rate. Alternately, you can ask for a raise on the card that offers the most rewards or the best rewards on your purchases.
How does asking for a higher limit affect your credit score?
As we discussed, raising your credit limit reduces your credit utilization, as long as you don’t increase your balance. But if you charge more and leave a higher balance on the card from month to month, this will actually lower your credit score over time. Also, if you charge so much that you start to make payments late, that can hurt your score, too. Taking out multiple new credit card accounts at once or getting a higher credit limit on more than one card at the same time can also hurt your credit score. This is especially true if you start charging more than usual on your credit cards.
How should you go about requesting a limit increase?
Always check your own credit report and keep a close eye on your monthly statements. If you see charges that aren’t yours, ask immediately. If you wait too long, it can be harder to get fraudulent charges off of your credit report. Those charges can damage your credit and make it harder for you to raise your credit limits.
If it’s been more than a year since you got your card and the company hasn’t raised your limit yet, you can ask for it. Contact your credit card company by phone or in writing. If you choose to write them, you can send them an email or send them a letter by mail. Always keep track of what communications you send and when so that you can track the process later if you need to. When asking, don’t act desperate. This sends a message to the credit card company that you are having financial troubles. They don’t like lending more money to people with financial problems.
Be honest with your credit card company when they ask why you need a higher limit. If you’re investing in your business or taking a well-deserved vacation or helping an adult child reach their educational goals, these are all worthy reasons for raising your credit card limit. Besides, your purchase history and credit report tell enough of your story that the company can probably tell what your situation is anyway. Honesty pays off when it comes to trusting you with a higher credit limit.
How should you manage a higher credit card limit when you get one?
After your credit card company raises your limit (if you’re approved), you need to continue with the good money management that got you a raise. The most important thing is to pay your bills on time. Pay more than the monthly minimum whenever possible, and keep your debt-to-income ratio as low as possible. Your debt-to-income ratio is how much money you owe according to your income. The lower your income, the lower your debt should be. This ratio can affect your ability to get a higher credit limit or to make purchases on credit, such as buying a new home or car.
In many cases, it may actually be better to open a new credit card account instead of asking your current company to raise your limit. For example, you might have had little credit, no credit, or poor credit when you got your current credit card. If your credit is stronger, you might qualify for deals that weren’t open to you before. Also, there are deals on credit cards now that may not have been offered when you opened your existing credit card accounts.