11 Smart Tips to Increase Your Credit Card Limit
You have to be responsible when using your credit card. If you are, you can enjoy several benefits. First, you will earn rewards. You would also be entitled to discounted travel rates. The credit card also provides a way for sorting out unplanned expenses. More importantly, the card is great for building your credit. It’s worth noting that these benefits only arise when using the credit card responsibly. Users who are responsible with the cards also increase their limits, which enable them to spend the money on anything they need. You too could be in that category.
Below are a few ideas to help you to build high credit.
- Check your eligibility
The fact that you own a credit card doesn’t make you eligible for a credit increase. Usually, you will not qualify for the raise if you just got the credit card. Most credit card issuers will give you around three months to determine if you’re a good candidate for the raise. Secured credit cards often make you ineligible too. You will also not qualify for the increase if you get one in the last six months. In fact, you will not be eligible to apply for an increase if your credit lines decreased in the last six months either. The issuer is entitled to approve or reject your request for an increase for any reason. Ask why you don’t qualify.
You’re more likely to be eligible for the raise if you:
a) settle your payments with all creditors on time
b) make monthly payments that are large enough to grow your balance
c) avoid issues or practices that could have a negative effect on your credit score
- Requesting card issuer for credit line increase
Arguably, this remains your best course of action. Simply speak to your card issuer and ask for a higher credit limit. Many times, the issuer would be more willing to increase your limit automatically, even without you asking. However, ask if the issuer doesn’t offer you this option, especially if you have been careful and responsible with your card usage. Call the toll-free phone number that appears behind the credit card. Alternatively, call the issuer’s number for a chance to speak with a customer service representative. Most issuers have websites, which you can visit to speak to a company representative to ask the organization to raise your credit card limit. Take the initiative to ask for a raise if no offer is forthcoming.
- Increasing Your Security Deposit
A security deposit is one of your best tools for increasing your credit card limit. It works well for clients with secured credit limits too. Again, you would have to use your phone to call the card issuer regarding this issue. Normally, you are required to deposit a minimum amount each month to keep your credit card going. However, nothing prevents you from increasing that amount. Pay more and you will be on your way to seeing your lines of credit grow. A secured credit card also offers you more benefits. One of the best known benefits is the boost it gives your credit score, which makes it easier for the issuer to approve your request for a raise. Learn how the secured card deposit works to see if it’s something worth looking into.
- Using Higher Credit Limit to Get a New Card
There are moments when you’re better off with a new credit card. Each card has its own limitations, which depend on several factors. You may be able to do nothing about these factors. For example, the card’s target demographic could be making it harder for you to apply for a credit line increase. Getting that new card is a brilliant decision on your part. Once the issuer approves your request, simply transfer part of the credit line in the new card to your old card for which you applied for the raise originally. This option is perfectly legitimate. However, put this strategy to use only if you boast of a higher credit limit. Otherwise, you would have to try a different strategy. It’s good to consider the risks of having more than one card though.
- Plead without Appearing too Desperate
It’s not just enough to ask the credit card company to increase your limits. You have to convince them that you’re eligible. You have to present a case that justifies your application. Nonetheless, avoid appearing too desperate. A sob story about a financial emergency would not do you any good. The key is to tell the credit card issuer why you deserve a higher credit limit. Never try to convince them that you need the raise. Some of the reasons you can cite to convince the issuer that you deserve the raise include your loyalty over the years. The fact that you have made all your payments on time should also work to your favor. Other reasons that make you deserving of the increase include:
a) paying your monthly balance in full every month without defaulting
b) paying above the minimum balance
c) using less than 30 percent of your existing limit
d) all payments are on time
e) a recent increase in your income
- Embrace Balance Transfers
Balance transfers would always impress any bank you wish to convince to reward you with a raise. What this means is you tell them of your intentions to transfer a significant portion from your existing cards to a different one. Banks are incapable of rejecting your application when you bombard them with such a request. That said, it would be great for you to know everything about balance transfers before executing them. As long as you are comfortable with this strategy, do not allow anything to stand in your way. How do the banks or issuers benefit from these transfers? First, they charge a balance transfer fee. Is there an issuer who doesn’t want to make money?
- Wait for an Organic Increase
Sometimes, you would be better off waiting for an organic increase. Yes, that may involve having to wait for eons. The increase would be worth the wait though. Generally, credit card issuers review all accounts at least twice a year. Your goal is to simply ensure that you are in excellent standing with your issuer. Be one of the best customers your issuer has and you will see your limits increase naturally. Develop a habit of making all payments on time. Other than that, you would do your chances of getting an increase a world of good by paying the balance in full each month. Make sure that you read all the issuer’s terms and conditions too. Keep your credit history good too.
- Focus on Timing
Know when to ask for the increase. It is good to apply when your credit score is good. It is good to apply when you are in good standing with all the financial institutions whose services you either have used or are currently using. Apply for a higher limit just when your employer has given you a pay rise too. When you are able to prove and demonstrate to your issuer that you are a truly responsible cardholder, your request would likely attract a more favorable feedback too. The worst time to apply is just when your earnings drop. Other than that, it would be unwise for you to apply when your applications for new credit lines are on the in-trays of various issuers. Keep your application far away, if your credit is in a poor state too.
- Do Your Math
When doing your math, the main issue you ought to focus on is the credit utilization ratio. The ratio is a measurement of all the money you owe in credit cards and all other revolving accounts. A comparison with the all the credit that’s available to you then follows. The comparison is expressed in percentages. The ratio is important to credit scoring firms. It informs them of the amount of credit available to you that you are using. This way, the credit firms are able to evaluate you and determine if you are worth the increase. Do not waste time approaching the issuers with a request for a raise before calculating this ratio. This step informs you how your application is likely to turn out.
- Use the Card Regularly
Why do you need a credit card? Ask yourself this question first before even contemplating the issue of raising the credit card limit. Ideally, you apply for the card so you never have to walk or travel around with liquid cash. In that case, you should be ready to use the card regularly. The more you do that, the higher your chances of being approved for the increase. Issuers are biased towards cardholders who swipe the cards at every opportunity they get. Those who rarely use theirs are unlikely to win the battle for increased credit limits. Apart from using the card regularly, you should also develop a habit of paying its balances on time.
- Ask for the right amount
Nobody knows your budget better than you do. For this reason, you know how much increase you need. What would be the best percentage to ask from your employer? When determining that, you’re likely to rely on your budget and regular expenses. Use the same formula when asking the credit card issuer for a higher limit. In such matters, prudence could be your biggest weapon. On average, you should limit the request to around 10-25%. You can always review this in the next 6-12 months. Anything more than this would appear greedy in the eyes of the issuers. You would be justified in asking for more if you can demonstrate that your situation has changed drastically, thus necessitating an increase on your limit of more than 30%.
- Check your eligibility
Using Your Credit Cards Responsibly
You may have read about the need for using credit cards responsibly above. You are probably wondering how to go about doing that. Well, there are a few solutions to your problem. Responsible use of the cards involves ensuring that all balances are cleared each month. Two, you will also need to train yourself to use the card on your needs rather than wants. Use it to buy only what you need and can’t do without. Three, you should never skip payments either. It would look good – in the eyes of the issuer at least – if you use the card for budgeting. Four, restrict yourself to 30 percent of your entire credit limit. Five, stay away from any fraudulent activities that target your credit card.
Benefits of Getting an Increase
Asking for an increase in your credit card limit has several benefits. It boosts your credit. It does this by ensuring that your credit utilization remains low, which would then tell everybody that you are successful at living within your means. Keep your credit utilization to around 30 percent. Additionally, the increase also introduces more flexibility into your finances. A higher limit enables you to apply for and obtain all the additional loans and credit you apply for. It also brings more convenience to your life. When faced with an emergency, you will be able to use the higher limit to resolve the issue fast. Your rewards potential improve significantly as your limit increases.
Dangers of Increasing Credit Card Limit
It’s important to know the dangers you expose yourself to when you request for an increase. First, the issuer has every right to request for your credit history. Remember, every request for your history has a direct effect on your scores. It could even lead to bad credit. For this reason, request a credit line only if you have good credit. Furthermore, you should also ascertain that none of your credit cards falls behind on payment. Otherwise, you will harm your chances of getting the increase due to poor credit. It would be better for you to start by working on your credit before asking for a raise.
In addition to that, a higher credit limit can also expose you to more debt. The fact that your spending power increases substantially when the issuer gives you an increase makes you more susceptible to acquiring more debts. It is tempting to spend more than you have or can afford in such a situation. The tons of interest charges that you rack up could damage your finances thus forcing you deeper into debt. A good solution for this is to develop solid self-control and avoid anything you can’t afford now. Learn to be more organized too if you intend to keep debt from ever destroying your life. Restrict yourself to a budget too if you want to keep your credit card expenses down.
How to Ask for a Raise
It’s good to know how to ask for the raise in the first place. First, study the credit card company’s requirements for eligibility. Once you’re familiar with that, your next course of action would be to examine your need for the increase. Assess your prevailing financial situation. Study the merits and demerits of asking for and getting the increase. If everything seems fine with you, then nothing should stand in your way. After considering all that, your focus should be on the credit history, as previously stated. It’s impossible to get an increase with bad or terrible credit. Be ready with all the documents the card issuer may need to decide if you’re deserving of the raise.
Documents needed here include the ones that prove your:
§ employment status
§ current annual income
§ what you pay in rent each month
With your documents are all in place, you can now be able to make the call. You can apply on the issuer’s website but you’re guaranteed of better results when you speak to a customer representative. Use this opportunity to make your case. Put more emphasis on convincing the issuer on what you deserve – rather than your need – for the raise. Prepare a few points to guide you through the talk. Ask as many questions as possible. The quality of the questions also matters. This ensures better responses you are likely to receive. You can also learn a lot from the issuer’s answers to your questions.
It never hurts to seek explanation for disapproval or rejection. Is it because of your pending student loans? Is your balance credit not good enough? Do you need to work on your debts? Taking this step would help prepare you better for the next application. Furthermore, the explanation you get regarding the denial of your request would help you come up with a plan for making yourself an irresistible candidate the next time you apply. More importantly, the reasons for being denied the increase would also help you improve your finances. The fact that the issuer rejected your request isn’t a reason for despair. Instead, the reason(s) should provide the fuel you need to manage your finances more prudently.