How to increase your credit card limit

John Schmoll
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John Schmoll
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Your credit limit is something banks take seriously. It represents the bank’s view of your creditworthiness, and it directly impacts your purchasing power. While a bank determines how much credit to extend when you apply, it’s possible to ask for more in the future. Seemingly dangerous, additional credit can help you when combined with prudent habits. Increasing your credit card limits isn’t as difficult as it might seem.

What is a credit card limit?

A credit card is a form of revolving debt. The credit limit is how much you can charge on your card during a billing cycle. It’s best to think of it as the maximum amount you can have on your card at once.

New charges, old charges you’ve not repaid, and annual fees go against your credit limit. For example, if you have a credit limit of $20,000 you can only make charges up to that amount. If you exceed your credit limit, your charges may be declined until you make a payment.

How are credit limits determined?

Issuing banks consider numerous factors when determining your credit limit. Thanks to the CARD Act of 2009, institutions must keep several components in mind when awarding a credit limit. Those are:

  • Debt-to-income ratio
  • Employment status
  • Income

These influence your ability to pay. Another key factor a bank may review is your credit score, as it shows them how judicious you’ve been with credit in the past. Banks use your score and ability to pay to paint a picture of how responsible you are with credit.

Strategies to increase your credit card limit

If you follow wise habits, it’s not difficult to receive additional credit. Banks don’t like risk, but they’re often happy to reward good behavior.

These are some solid strategies that could increase credit limits on your cards.

Accept offers from the bank: Issuers often extend pre-approved offers to select cardholders to increase their credit. These may come via email or mail. If you want the additional credit, simply accept the offer.

Call the card issuer: If you feel you deserve an increased limit, don’t overlook calling the bank to ask. Expect to provide up-to-date income information and a reason for the request. You may immediately receive an answer over the phone, but it can also take several days.

Complete a form online: Banks frequently have forms to complete online that allow you to request a credit limit increase. It’s safe to assume they’ll ask for the same information you would provide via a phone call.

How to earn a credit limit increase

If you’re wise with credit, it’s common to ask ‘how can I increase my credit limit?’ Banks are typically risk-averse so they’re not going to increase your credit limit if you’re displaying poor habits.

Following a few prudent steps can help improve your chances of success. Those include:

  • Reduce your indebtedness: How much of your credit you use is the second largest component of a credit score. Having a low credit utilization ratio reflects positively on you. Keeping this ratio under 30% is advisable to increase your chances of success.
  • Make timely payments: Payment history plays the largest role in your credit score. “Paying your credit balances on time and in full can help you maintain a low utilization rate. This not only strengthens your credit score but also demonstrates financial responsibility to lenders,” says Lora Monfared, head of consumer card products at Bank of America. If you’re erratic with making timely payments, don’t expect lenders to increase your credit limit.
  • Include all sources of income: Banks must consider your income when determining your credit limit. Have you recently received a raise or promotion, or do you have a new job? Informing the lender of your current income may put you in a good position to receive additional credit.
  • Follow good habits: Treat a credit limit increase request like applying for a new card. “Increasing your credit limit is similar to getting approved for a new card, as both involve demonstrating your creditworthiness to lenders. By consistently practicing good credit habits and building a strong credit score, you’ll improve your chances of securing a higher credit limit,” says Monfared.

When should you request a credit limit increase?

Requesting an increase to your credit card limit requires good timing. After all, you want to put your best foot forward with the ask.

A recent salary increase is a good time to ask for an increase. Reduced indebtedness and a good history with the bank are other legitimate reasons to make a request.

Monfared concurs, saying, “A good time to ask for a credit limit increase is when you have positive changes related to these factors, such as an increase in income or decrease in total debt.”

If your debt utilization ratio is low and you’re responsible with your card, the timing may be right to request an increase.

Frequently asked questions

It’s not uncommon for people to have questions when determining how to increase their credit card limit. These are typical questions cardholders have.

How long does it take to get a credit limit increase?

It’s possible to receive an increase immediately. However, it can sometimes take up to 30 days to receive a decision. The bank will review your information and the lag time depends on their process.

Will requesting a credit limit increase hurt my credit score?

Yes, a credit limit increase may harm your credit score. It depends on if the issuer processes it with a hard inquiry. If they do, it’s fair to expect a temporary hit to your credit.

However, if you use credit wisely, the additional credit will likely help you in the long run as it can lower your utilization rate.

Can you get an automatic credit limit increase?

Automatic increases to credit limits are possible via many banks. Understandably, these commonly only happen for customers practicing discerning credit habits. The increase may be a tool banks use to retain good customers.

Can I decrease my credit card limit if I want?

It is possible to ask for a credit limit decrease if you wish. This may have unfortunate consequences, though, as it can lower your credit score due to an increased utilization ratio.

If the higher limit tempts you to overspend, the lower score may be less of a concern.

The bottom line on increasing your credit limit

Receiving extra spending power may seem like a good thing, though the issuing bank may not always see it that way. Numerous factors go into a credit limit decision and it’s key to know what those are before asking for more credit. Practicing smart credit habits is the best way to achieve an increased limit. Aligning that with your financial goals is a good way to put yourself in the best light now, and in the future, to receive a possible increase.

author
John Schmoll
Cardratings Contributor

John Schmoll is a former stockbroker with an MBA in Finance and more than 12 years of experience in finance and business writing. He’s passionate about helping readers reach their financial goals, whether that’s paying down debt, learning to invest, saving or earning more money....Read more

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