Find out if you can get a credit limit increase on your credit card.
If you use your credit card regularly, requesting a higher credit limit could help you avoid penalty fees, earn frequent flyer points on big ticket items or allow you to consolidate balances onto one card.
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How to increase the credit limit on your credit card
The first step is to ask your bank for a credit limit increase. Here’s how you can initiate an increase to your credit limit with different credit card providers:
Credit limit increase offers
Your credit card provider may also offer to send you invitations to increase your credit limit. This service is only available if you opt-in to receive the invitations. Contact your provider directly to find out more.
What should I consider before requesting a credit limit increase?
When you first get a credit card, your bank or provider will usually assign you with an affordable credit limit for your circumstances. This limit is based on factors in your credit card application including your income, expenditure, existing debt and credit score or credit rating.
If you get a credit limit that’s too high, you’ll increase the risk of ongoing debt. Submitting a request for a credit limit increase also impacts on your credit history. So before deciding if you want a credit limit increase, it’s a good idea to consider whether or not these circumstances have changed.
Reasons why an increased limit could work
It could help your credit score.
If you can afford a higher credit limit, it could help improve your credit score by providing you with a lower credit utilization ratio (the amount of credit used compared to the amount of credit available).
Increased spending potential.
You’ll enjoy greater spending power, because you can make larger purchases without worrying about maxing out your card.
Greater rewards earning potential.
A higher credit limit means you can use your card for more purchases and maximize the points you earn per $1 spent on a rewards or frequent flyer card
You’ll have a bigger safety net in case of an emergency.
Why you shouldn’t
If you have a bad credit history.
When assessing your application, the bank will make an inquiry into your credit history. This credit inquiry is then recorded on your credit report and can negatively affect your credit score.
Potential rejected application.
If your request is denied, it will impact your credit score and you’ll have to wait longer before your next application. Lenders tend to get suspicious when they see many credit inquiries made within a short period of time listed on your credit report.
Meeting monthly repayments.
A higher credit limit also means higher minimum monthly repayments.
Increased debt risks.
Having more credit could increase your spending and lead to more debt if you’re not disciplined.
What happens if I go over my credit limit?
Although your credit limit generally sets the ceiling for your credit card spending, some card companies may let you exceed that limit and some may also charge you a penalty for going over your limit. Make sure you check these details with your credit card company so you can avoid additional fees if you max out your card.
How to increase your chances of being approved for a higher credit limit
- Use your card regularly. Card providers generally favor cardholders who use their cards frequently and pay off their balances on time. This shows them two things: firstly, that you have need for a higher credit limit, and secondly, that you can to handle credit responsibly.
- Make payments on time and pay your balance in full. Timely payments greatly improve your chances for approval because they show the bank that you are a responsible and low risk borrower. Paying off the full balance also shows the bank that you’re capable of managing a higher credit card limit.
- Optimize your credit score. Always protect your credit score by making payments on time. Even late payments on phone and utility bills, car loans or personal loans can hurt your credit report and deter the bank from increasing your credit limit.
- Don’t ask too soon or too often. Unless otherwise stipulated, credit card providers typically review your account after six months. Asking before that time could raise alarm bells and hurt your chances of a future credit limit increase. Asking again too soon after a previous request can have a similar outcome.
- Don’t ask for too much. Prudence can go a long way when it comes to requesting a credit limit. It is better to ask for a conservative 10-25% increase than to wildly shoot for more. Unless your circumstances have drastically changed, your request should be capped at 30% more than your current limit.
- Apply for a card with a high minimum credit limit. Premium credit cards typically offer higher minimum credit limits than standard cards. If you meet the eligibility requirements for these cards, you could compare your options and apply for one that suits your spending habits and needs.
Even if a credit limit increase isn’t on the cards for you yet, all the above suggestions are good habits to practice. The underlying principle is to establish healthy credit history by borrowing and repaying responsibly. A credit limit increase may be good to have but it shouldn’t increase your spending dramatically, or negatively impact your ability to repay. You should only apply for a credit increase if you can afford it, and spend responsibly.
What’s the maximum credit limit on credit cards?
Credit card issuers will typically want to know what your income is (in addition to your credit score) in order to be approved for a higher credit limit. Before the financial collapse of 2008 it wasn’t uncommon for issuers to approve credit limits as high as $50,000 or higher on a single card. Limits have since been reined in to better manage the risks involved with huge credit ceilings.