How to increase credit card limit?

How do you increase your credit limit?

You can usually request an increase to your credit limit through your credit card provider’s online banking portal or app, over the phone or at a branch. Your provider will typically ask you to provide information about your current financial situation to ensure the new credit limit suits your needs and is affordable.

You’ll likely be asked to provide information about your income, assets, expenses and debts, such as other credit cards or loans. Your provider may also check your credit history to better assess how you manage credit.

What is a credit limit?

Your credit limit is the maximum amount of money that you can spend with your credit card. It’s set when you’re approved for a credit card, based on the personal and financial information you provide and the minimum and maximum credit limits for the specific card.

You can request to change your credit limit at any time. If you need more credit, you can apply for an increase. If you need less, you can apply for a decrease.

Who can change a credit limit?

Only the primary cardholder of the credit card can request a change to the credit limit. Secondary or additional cardholders generally will not be allowed to do so. In the case of joint credit cards with two primary cardholders, you’ll generally need both parties to agree when requesting to alter the credit limit.

What are the benefits of increasing your credit limit?

The main benefit of increasing your credit limit is that you’ll be able to access more funds. This could be used to pay for any large upcoming purchases, be helpful when you’re required to put down a credit card with a certain limit for accommodation or a rental car when travelling or could provide an additional safety net in the event of an emergency.

That being said, you should first consider whether you could pay for expenses in another way, such as by creating an emergency fund.

What are the drawbacks to increasing your credit limit?

Increasing your credit limit could impact your ability to get credit elsewhere in the future. That’s because banks and other credit providers look at your credit report when deciding whether to give you credit, and how much.

Most lenders typically look at your credit card limits, listed on your credit report, when deciding how much they would offer to loan you. Larger credit limits may be viewed by lenders as larger forms of potential debt, regardless of the actual outstanding debt you have. You may be offered lower loan amounts or credit limits as a result or have your application knocked back altogether.

By increasing your credit limit, there’s also the risk that you could spend more on unnecessary purchases and this could lead to debt. So it may not be a good idea to increase your credit limit if you currently carry a balance on your card month to month.

Does increasing your credit limit hurt your credit score?

Your credit limit has an impact on your credit score. According to credit reporting body Equifax, a smaller credit card limit may carry a different level of risk than a larger one.

Additionally, if you request to increase your credit limit your provider may do a credit check and this would appear on your credit report as an enquiry. If you make multiple credit enquiries in a short time frame, this can hurt your credit score, as it may appear that you’re desperate for credit.

For these reasons, before you increase your credit limit, you might want to check your credit score. You can check your credit score for free with Canstar or via the Canstar App.

If your score is not as high as you’d like, you can take steps to help improve it such as by paying existing loans and bills on time, checking your credit report for inaccuracies and lowering the credit limits on your existing credit card/s.

Your credit limit is just one factor that can impact your credit score. Other factors such as the type of credit you’ve applied for and the types of providers to whom you’ve applied, the number of applications you’ve made and your repayment history can also impact your score.

How can I decrease my credit card limit or close my account?

You can decrease your credit limit or close your account by contacting your credit card provider via its online banking portal or app, over the phone or at a branch.