If you have a credit card, chances are that at some point, you’ve wished you had more available credit. Maybe you’re stuck in a situation where it would be helpful to have some extra cash, but the bank won’t lend it to you. Or maybe your purchases are getting close to exceeding the dollar limit on your card, and it’s making you nervous.
Whatever your reason for wanting a higher credit limit, here are a few ways to increase your card’s spending power.
Ask for an increase
The best time to ask your credit card company to increase your credit limit is when you have a good payment history and a positive credit score. Your payment history will be added to the equation when calculating your credit score, which helps determine whether or not you’re eligible for an increase in line of credit.
If you’ve been paying off all of your bills on time, then there’s a good chance that you’ll qualify for an increase in line of credit. If so, then it’s important that you speak with someone at the bank who can help guide you through each step before any changes are made to their records.
Get a new card
So you’ve got a card with a low credit limit. Why not get a new one? You might be able to increase your limit by applying for a card that has a higher limit or that offers lower interest rates and better rewards programs.
You can also try to reduce the annual fee on your current card; sometimes, this is easier than switching cards altogether. For example, if you’ve been using your card for ten years and have always paid off the balance in full each month, ask the company if they’d consider lowering the annual fee from $80 to $20 or even $0.
The benefits of increasing your credit limit
One of the most important reasons for asking for a higher credit limit is that it can help you improve your credit score. In order to take advantage of this, you need to be able to show that you only use a certain percentage of your available limit, or “credit utilization ratio.” If you are using even less than 10% of your available credit, then this will be considered good practice by the banks and financial institutions who are reviewing these numbers.
By paying off more debt each month, especially if it is with different lenders with varying rates and terms on each loan, you can rest assured that your credit score will go up because you have been demonstrating responsible financial behavior while also saving yourself money over time (by reducing your interest payments).
Conclusion
As you have learned above, there are many benefits to increasing your credit limit. You can grow your credit score, make your payments easier to manage and improve your spending power. You just need to choose the best option for you by taking into consideration what will work with your current financial situation as well as which options would be available for someone in similar circumstances.
So remember these tips when it comes time for you to ask about an increase of your own! But if none of those things work out, then try one more thing before giving up: ask why not? It could be that there’s some other reason why they won’t approve a limit increase, something as simple as having too many recent late payments or maybe even just not having enough information on file with them.
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