Find Out When To Take a Credit Limit Increase

With every Credit card comes a maximum limit up to which you can splurge. The card issuers may offer to raise the limit periodically. Sometimes asking for a credit limit increase is imminent when the times are rough and your spending requirements aren’t on par with the limit. With the global coronavirus pandemic, many are requesting the credit limit increase to ease the financial burden.

What is a credit limit?

The credit limit is the maximum balance available to you on your Credit card at any given point in time — although these limits aren’t set in stone, and you can overspend in a few cases.

Your bank or financial institution will set your credit limit while issuing you a Credit card. This credit limit is based on various elements of the credit history including, credit score, income, employment status, etc.,

The Credit card interest rate is charged daily as long as there’s an outstanding balance in your account.

When is the great time to request a credit limit increase?

While you may jump at the chance to be offered or ask for a limit increase if your financial condition is not very good, it is wiser to hold over it or reschedule and consider other options.

Always remember that you should ask for an increase only if you’re certain that you won’t be overspending it.

Credit card interest rates ranging from 1.5% to 2.99% can be charged if you overspend or make no payments to your account.

  1. When you get an income increment: If you’ve got a hike recently in your job, you may update your increased income to your Credit card issuer, or you may update it directly in your credit card account, which may cause an automatic increase in credit limit in a few months. 
  2. When your credit score is good: Your good credit score shows that you’re handling your credit responsibly. This acts as an indicator to the Credit card issuer that you can fairly manage an increase in your credit limit.
  3. When you need to splurge: Certain crucial events, such as buying a property, higher education, medical costs, marriage, can change your spending habits radically. When the need comes to accommodate your spendings, you may request a higher credit limit.

When should you avoid requesting a credit limit increase?

Increases in credit limits aren’t completely harmless. Unless it’s an automatic increase, every time you request an increase, the lender will pull up a credit report inquiry, which will negatively impact your credit score.

It’s always better to be safe than sorry, so below are some of the worst situations you could ask for an increase in credit limit:

When you have bad credit:

If your credit score is really low, there’s an equally thin chance for your request for an increase in credit limit to get approved. And if you still proceed, the credit card may pull a hard inquiry on your credit report, which will lower your score further.

When your income has decreased:

if you’ve recently gotten laid off, demoted, or lost your job, that has resulted in your income to lower, it’s better to wait it out to settle before requesting a credit limit increase.

When you’re close to your card limit:

If you’re already close to maxing out your approved credit limit, consider clearing the debt first before you ask for an increase in your credit limit. You may also be charged a Credit card interest rate applicable on the outstanding balance.

When you’re a new Credit card owner or have recently requested a limit increase:

Many card issuers will require an interval of a minimum of three months for the new cardholders before entertaining any request for a limit increase. With some banks, this time period can be extended till six months after a recent credit limit increase.

How can you request increase?

Sometimes card issuers increase your credit limit automatically without your request. Usually, this happens annually or if the card issuer observes your increase in income.

You can request an increase either: by calling the concerned representatives or online. Online requests may be made via the card issuer’s mobile app or through the website.

A credit limit needs to increase to time your request carefully. If you take note of the guidance given in this article, you may grab an effortless win for your request.

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