If you use your credit card regularly, requesting a higher credit limit could help you increase your financial flexibility, avoid over-limit penalty fees, earn Airpoints on big-ticket items or allow you to consolidate balances onto one card. Use this guide to learn the factors to consider and some tips to improve your chances of approval.
How to increase the credit limit on your credit card
The first step is to ask your bank for a credit limit increase, and you can find the contact details for your credit card company in the table below. Alternatively, many credit card providers have facilities that let you apply for a credit card increase online.
|American Express||Varies per card. Click here for contact information.|
|ANZ||0800 658 044 Mon-Fri: 8am-8:30pm Sat-Sun: 9am-5pm|
|ASB||0800 100 600 Mon-Fri: 8am-8pm Sat: 8:30am-5pm|
|BNZ||0800 275 269 Mon-Fri: 8am-8pm Sat: 9am-6pm|
|The Co-operative Bank||0800 554 554 Mon-Fri: 8am-8pm Sat-Sun: 9am-5pm|
|Farmers|| 0800 990 077 Mon-Wed: 8:30am-6pm Thu-Fri: 8:30am-9pm Sat-Sun: 9am-6pm|
|Flight Centre||0800 500 450 Mon-Wed: 8:30am-6pm Thu-Fri: 8:30am-9pm Sat-Sun: 9am-6pm|
|Gem||0800 500 505 Mon-Fri: 10:30am-6:30pm|
|Kiwibank||0800 521 521 Mon-Thu: 7am-9pm Fri: 7am-8pm Sat-Sun: 8am-4:30pm|
|Q||0800 119 100 Mon-Wed: 8:30am-6:00pm Thu-Fri: 8:30am-9pm Sat-Sun: 9am-6pm|
|TSB||0800 872 226 Mon-Fri: 8am-7pm Sat-Sun: 9am-5pm|
|Warehouse Money||0800 801 808 Mon-Fri: 8:30am-7pm Sat-Sun: 9am-5pm|
|Westpac||0800 888 111 Mon-Fri: 7am-8pm Sat-Sun: 8am-5pm|
What should I consider before requesting a credit limit increase?
When you first get a credit card, your bank or provider usually assigns you an affordable credit limit for your circumstances. This limit is based on your credit card application factors, including your income, expenditure, existing debt and credit score or credit rating.
If you increase your credit to a too high limit, you run the risk of ongoing debt. Submitting a request for a credit limit increase also impacts your credit history. So, before deciding if you want a credit limit increase, it is a good idea to consider whether or not these circumstances have changed.
If you are considering a credit limit increase, the following pros and cons may help.
Reasons why you might want to increase your limit
- Increased spending potential. You can enjoy greater spending power because you can make larger purchases without going over your existing credit limit and potentially being charged a fee.
- Greater rewards earning potential. If you have a rewards or Airpoints card, you may be able to earn more points with a larger credit limit.
- Emergency funds. You have a bigger safety net in case of an emergency.
Why you shouldn’t request a limit increase
- You have a bad credit history. When assessing your application, the bank inquires 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 impacts your credit score, and you have to wait longer before you can make another application. Lenders tend to get suspicious when they see repeat credit inquiries made within a short period listed on your credit report.
- Meeting monthly repayments. A higher credit limit and larger debt also mean higher minimum monthly repayments.
- Increased debt risks. Having more credit could increase your spending and lead to more debt if you are not disciplined and repay your account in full each month.
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, while others may charge you a penalty for doing so. 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 favour cardholders who use their cards frequently and pay off their balance on time. This shows them two things: you require a higher credit limit and can handle credit responsibly.
- Make payments on time, and pay your balance in full. Timely payments can improve your chances for approval because they show the bank you are a responsible and low-risk borrower. Paying off the full balance also shows the bank that you can manage a higher credit card limit.
- Optimise your credit score. Always protect your credit score by making payments on time. Even a late payment of your phone bill, utility bill, car loan or personal loan 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 chance 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 these cards’ eligibility requirements, 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 a 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 will spend responsibly.
What if you can’t increase your credit limit?
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You may find that your current credit card provider may not allow a credit increase. However, you have other choices, as you can consider applying for a card with another provider. You can compare your options in the table below.