There are a few ways to increase your credit card’s limit. Sometimes, your lender will increase your limit automatically. You can also request a credit limit increase. Here, we’ll explore what a credit limit is, how to increase it, the pros and cons of a higher limit and what to do if you can’t raise your limit.
What is a credit limit?
A credit limit is the maximum balance you can have on a given credit card. Once you hit your limit, new transactions may be declined.
Generally, if you have more debt, a low credit score or a lower income, your limit may be on the lower end if you’re approved for a new card. As you use your credit card responsibly, you may be able to increase the limit.
A credit limit impacts how much you can spend on a credit card at once, and a low limit may make big-ticket purchases challenging. Your credit limits also affect your credit utilization, or the percentage of your total credit limit (across all your cards) in use. Generally, keeping your utilization lower can positively impact your creditworthiness.
Ways to get a credit limit increase
There are 2 main ways to get a credit limit increase: You can request one from your lender or get one automatically.
Request a limit increase
Many lenders allow you to request a credit limit increase online or over the phone. Your card may need to have been open for a set period, such as 3 months, before a lender will consider a limit increase.
Lenders may look at your income, credit score, payment history and how long your account has been open when they consider your request. Certain factors can put you in a better position to request an increase. For example, if your income recently increased, and if you’ve demonstrated a history of consistent, on-time credit card payments, you may be a good candidate.
Get an automatic limit increase
Some lenders automatically increase your credit limit if you meet certain criteria. This can happen if you’ve recently started making more money and updated your income. Your lender may also ask you to update your income information, which could mean they’re thinking about giving you an increase. Good credit habits, such as keeping your utilization low and consistently paying your balance in full can increase the likelihood of an increase.
If your lender decides to increase your credit limit, they may do it automatically or ask you if you would like an increase.
Benefits and drawbacks of increasing your credit limit
A higher credit limit can come with several benefits, including a better credit utilization ratio. If your limit increases but your spending stays the same, your credit utilization ratio will go down, which may improve your creditworthiness over time.
A higher credit limit means more purchasing power. You may make larger purchases without having to carry cash, and you might not have to worry about your limit when handling everyday expenses.
The biggest drawback to increasing your credit limit is the risk of overspending. If you tend to overspend, carefully consider how you’ll handle more purchasing power.
What if you can’t get a credit limit increase?
If your lender rejects your request for a credit limit increase, you have several options. You can apply for a different card that may offer a higher credit limit. You can also wait for an automatic increase or request an increase again after several months. Paying your full balance on time and keeping your credit utilization ratio low can help increase your chances of being approved in the future. Consider your timing – if you wait until you’ve been promoted to a higher-paying role or paid off other debts, you may be more likely to be approved next time.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
