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In the days before the Credit CARD Act, it was easy to increase the limit on your credit card. If you’d made all your payments on time for the past six months to a year, you called your credit card company and asked for a credit limit increase. The representative would run a quick credit check and if everything looked okay, would grant you a credit limit increase.
I was quite surprised when I requested an increase from Capital One by phone the other day (to offset the potential damage to my credit score when CitiBank cut my credit limit in half) and the representative told me that the company no longer increased credit limits by request. The company would evaluate my account at regular intervals and grant a credit limit increase if they decided to do so at that time.
Other credit card issuers, however, may still grant credit limit increases by request. There are a few things you can do to improve your chances of getting approved.
1. Have a good payment history. This is key to getting a credit limit increase. A credit limit increase is just like a loan, in that companies won’t grant you more credit if you can’t manage the credit you already have.
2. Use your credit card regularly. If you’re not using the credit you have, why would a company give you more? Use your credit card — even if you pay off your entire balance at the end of the month — to show an active credit history and that you know how to use and manage credit.
3. Have a specific purchase in mind. Credit card issuers are more likely to offer you a credit limit increase if you call with specific plans for the increase. “I’m making a big ticket purchase and I want to do it with your credit card.” “I’m going on vacation and yours is the only card I’m taking with me.”
4. Make a balance transfer. If you call for a credit limit increase with the address of your other credit card in hand, ready to do a balance transfer on the spot, you’re more likely to get the increase. This has worked for me in the past. Taking advantage of 0% balance transfer offers is a great way to get rid of balances on a high-interest card. Don’t forget to request enough of an increase to cover balance transfer fees and leave you with a little breathing room, too. The customer service representative should be able to recommend a good amount.
Reasons to Get a Credit Limit Increase
There are four very good reasons to request a credit limit increase.
- Big-ticket purchases that you have plans (or savings) to pay off, but want the warranty protection through your credit card
- Balance transfers from higher interest credit cards
- To change your debt-to-available credit ratio, which affects your credit score. If you’re going for a mortgage or car loan, be careful. Banks also evaluate your total available credit as a risk factor — the more credit you have available, the more trouble you can get into if you max out your credit cards.
Should You Request a Credit Limit Increase?
Think twice before getting a credit limit increase if you’ve maxed out your cards on living expenses or purchases you can’t afford to pay off yet. If you increase your credit limit and then accrue more credit card debt, your minimum payments will go up and you’ll find yourself in an endless cycle of debt. If you’re facing this situation, you may want to speak to a credit counselor. You can find a reputable credit counselor through the National Foundation for Credit Counseling.