If you want to access more credit, one of the easiest options is to increase the limit on your credit card. But how can you go about this?
Let’s take a closer look at how to increase your credit limit, the pros and cons, how often you should do it, and more.
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How to Increase Your Credit Card Limit
The easiest way to increase your credit limit is to get an automatic increase. Some providers may offer this if you have a good credit score and have been a good customer.
Alternatively, you can ask for an increase. How to increase your credit card limit with RBC, Scotiabank, CIBC, or other banks will depend on the bank in question.
However, there are a few ways you can normally request an increase:
Call Your Bank
One of the easiest options is to call your card issuer and speak to a customer service representative. Ask whether you are eligible for a higher credit limit.
You might be asked why you want this or for details of your income before the bank makes a decision.
Apply Online
There is often a place you can do this on the website of your credit card issuer. Again, you may have to provide information, including your income details.
Visit a Branch
You might feel more comfortable visiting a branch in person.
Head to your nearest branch and ask to talk with someone about increasing your credit limit.
How Often Should You Request a Credit Limit Increase?
There are no rules about how often to request a credit limit increase.
If you ask for an increase, but your request is rejected, don’t try again the following month because the answer will likely be the same.
If you can get information about why your request was declined, this can give you further insight.
Perhaps wait until you get a pay rise, improve your credit score, or have a longer history of making your payments on time.
Sometimes, it could lead to a hard inquiry. This can dent your credit score, so you don’t want to ask too frequently.
Even if you are given an increase, you may want to wait between six months and a year before requesting another one.
Why Did Your Credit Limit Increase Automatically?
Sometimes, you may get a credit card limit increase without asking.
While your provider can’t just increase it automatically without getting your permission first, they may offer you an increase.
They may do this because you have a good credit score or you have demonstrated that you are a good customer and can pay your debts on time.
Does a Higher Credit Card Limit Affect Your Credit Score?
One way having a higher credit card limit can affect your credit score is to lower your credit utilization rate.
This is the total amount of credit you have access to that you are actually using.
If you have a $1,000 limit and a balance of $400, your credit utilization rate would be 40%. If your limit is increased to $2,000, your credit utilization rate will decrease to 20%.
A lower rate is better for your credit score; keeping it under 30% is ideal.
Pros and Cons of Increasing Your Credit Card Limit
Pros:
- Reduce your credit utilization rate, which can improve your credit score.
- Enjoy more flexibility to make large purchases or pay for emergencies.
- Reduce the chance of getting hit with over-the-limit fees.
Cons:
- It could lead to more debt if you have difficulty controlling your spending.
Should You Request to Increase Your Credit Card Limit?
If you want to get access to more credit each month and reduce your credit utilization rate, you may want to request an increase in your credit card limit.
However, if you think it may lead you to overspend, it may not be ideal. So consider the pros and cons carefully to help you make your decision.
FAQs
How quickly can you increase your credit card limit?
Once you request a credit card limit and it is approved, it should not take long for you to be able to use the extra credit, but it depends on the card issuer.
What is a good credit limit?
It depends on your situation and your spending habits. If you spend a few hundred dollars on your credit card each month, a limit of $1,000 or $1,500 may be plenty.
Does your credit limit increase automatically?
Some credit card providers offer to increase your credit limit automatically, which they need your consent to do. They may do this if you have proven to be a good customer and you have a good credit score.
Related:
- Does Opening a Chequing Account Affect Your Credit Score?
- How to Choose the Best Credit Card In Canada
