Do you want to increase your credit card limit? You can get approval using these seven proven tips but first and foremost, ask yourself, why you want to get your credit limit increased? If it is for shopping or luxury that you cannot afford, you need to drop your idea of increasing the credit limit.
As we have already covered up in the credit repair guide, spending on shopping and luxury is not a good idea if you cannot cover it up. But for those of you who can, here are my seven proven tips on how to increase your credit limit.
1. Exemplify Yourself as a Good Customer
If you are a good customer who pays all the debts on time and has a good relationship as a customer with the bank, your chances of getting instant approval on increasing your credit limit.
Banks love the customers who are responsible and can return their money. But if you are one of those who have always maxed out their cards, in debt, and having late payments, or worst if you have missed your payments, consider your chances to null. Banks will never increase your credit limit.
2. New Credit Card with Higher Limits
The simplest option to get a higher limit credit card is to apply for a new one. This is a convenient option; ask your current bank or lender for a new credit card with a higher limit. If he is not ready, you can go for other banks and lenders who have an increased cap on credit cards.
We compared almost 15 credit cards using Credit Karma and found the best deal with minimum deposits and premium offers.
You can compare a few of them for yourself,
3. Be Wise if you are requesting an increased limit on your existing card
So, if you don’t plan to go for a new credit card with a higher limit, you can request an increased limit on your existing card.
When you apply for a hike on your credit limit, the banks or lenders will issue a credit pull and check your credit score for the possibilities.
Now, when they issue a credit pull, it is noted down on your credit report, and you may see a slight drop in your credit score.
Another horror tip,
If multiple banks are issuing a credit pull on your account, this slight drop in your credit score is now much more extensive, and you can see significant decreases in your credit score.
These credit pulls are also noted by other banks and departments, which you would not love them to know. It creates an indirect impact on your eagerness for money, and again, it is a red flag.
So, be wise if you are requesting an increased limit on an existing card. Go for this option only if you have the best or good credit score.
Do not if you have a fair score or a bad credit score.
4. Let them know you deserve an increased limit
It is evident that you need to ask them or request them to increase your limit, but you don’t need to tell them why you need an increased limit on your credit card.
Instead, let them know why you deserve an increased limit. You can start by listing a few points such as –
- You have paid all your dues on or before time.
- As a responsible customer, you have never missed the payments.
- You have a good credit score, signifying how financially well mannered you are.
- There is an increase in your salary, or there are good profits in your business.
- You utilize only 30% or lesser than that each month.
If you are utilizing only 30% of your credit limit, why should you go for an increased limit? I have explained this in my 11 steps guide to credit repair; here is a small gist –
Bureaus calculate your credit spending limit in percentages. So, if your credit limit is set to $1500 and you are using only $500, here is the ratio,
(500/1500)x100 = 33.33%
On the other hand, if you are spending $1200 on your credit card with a limit of $1500, this directs the bureau with a negative impact. You can soon see a decline in your credit score because you utilize more than 30% of your credit limit.
(1200/1500)x100 = 80%
Moreover, if you spend only 30% of your credit limit, there is a high chance of boosting your credit score. So, if you are going for an increase, try keeping yourself at 30%.
Be polite and have a good and calm conversation with the bank employees. Do not tell them your sob stories; instead, let them know why you deserve it. This increases confidence, and also a good behavior can help you have it much quicker.
5. How much to increase Matters
One thing that you don’t want to do is ask the employees how much should you increase your credit limit. This is an unfair practice, and also, the bank authorities prohibit their employees from such advice and suggestions.
Remember the credit ratio we discussed earlier before going for a too high or too low increased limit on your credit card. The best possible you can do is go for a 10-25% increase in the limits.
If you go anything higher than this, there is a good chance of getting a red flag on your credit score, and also, you will have to reapply again, as this will be rejected.
Moreover, the percentage of the limit you are asking for should be justified to yourself. Can you pay this amount on your regular expenses?
Think wise before going for a hike on your credit limit.
6. Tempt Banks with Balance Transfer
If you have multiple credit cards from various banks, you can transfer the balance to the current credit card you want to increase the limits for.
This is an excellent option if you think it wisely.
Certain Banks have a short period where they charge 0 interest rate on transfers. So, if you transfer your balance during this short period, there is a good chance of saving 100’s of dollars.
But what’s in for the transfer in the current bank? Why would they increase your limit if you make this transfer?
When you make this transfer, the current banks get an opportunity to charge you with their interest rate on balance. Moreover, though there is zero interest rate on transfer by your previous bank, the current bank can have a transfer fee. This helps them to earn a bit more.
So, if you tempt them with a balance transfer in exchange for increased credit limits, you stand an excellent chance to get your job done.
7. Let the Banks Offer you
Banks monitor their customers (say, periodically every quarter) and if you have been a good customer, paying dues on time and maintaining financial condition. There is a good chance of banks offering you an increased limit on your credit score.
This also depends if you are having a hike in your salary, ensuring the banks can return your dues.
So, be a good customer and pay on time and never miss a payment.
Now that you have read all the above tips, I have a few vital suggestions for you before closing this practical guide. 1. Always be a good customer to the banks and maintain your financial situation 2. Do not get your credit limit increased if you are doing it for shopping or luxury.
I hope this guide helps you; if you have any questions, do drop them in our comment section, and we would love to answer.