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When you’re approved for a new credit card, you’ll receive an initial credit limit based on numerous factors, including your credit score and credit history, as well as your income and history with that card issuer. But over time, you may find that your credit limit isn’t enough for your needs. Fortunately, it’s often possible to increase the limit of a credit card.From simply waiting for the next automatic credit limit increase to asking for one, there are ways to raise your limit. Keep reading to learn more about how to increase your credit card limit and the benefits of doing so.
What Is a Credit Limit?
When using a credit card, it’s important to understand how a credit limit works. A credit card’s credit limit is the amount that the card issuer is willing to loan to the cardholder. Every purchase is considered a loan, and your purchases are typically approved up to the amount of the account’s credit limit. The credit limit on your credit card represents a revolving loan that the card issuer has already approved. The card’s credit limit represents the most that the card issuer is willing to loan you. It exists to limit the card issuer’s exposure to delinquency and default. According to the most recent data from Experian, the average credit card limit in 2020 was $30,365. Most cards have a fixed credit limit that’s listed on your credit card statement each month. However, some cards are advertised as having no preset limit. With these cards, there’s still a limit, but it will vary based on your current balance and creditworthiness. Cards with no preset spending limits are typically charge cards or premium travel rewards cards.
Are You Eligible for a Credit Limit Increase?
The credit limit that you received when you opened your account was based on just a snapshot of your creditworthiness at the time. But since that account was opened, you may have added to your credit history and improved your creditworthiness. For example, you may have paid down some of your existing debt, and you may have increased your income. If your credit has improved significantly since you originally applied for the card, or since you last had your credit limit raised, then you may be eligible for an increase given how credit cards work. However, if you’ve had credit problems, you may not be eligible. Other reasons you might not be eligible for a credit limit increase include if you have the same or lower income, or have recently applied for numerous new lines of credit or credit line increases.
How to Increase Your Credit Card Limit
Receiving a credit limit increase isn’t that hard, and you might not even have to do anything to get one. But in most cases, you will have to contact your credit card issuer to request an increase to the limit of your credit card.
Automatic Credit Limit Increase
Some credit card issuers offer automatic credit limit increases. You could simply receive a notice in the mail that your credit line has been increased. For example, some credit card issuers, such as Capital One, offer automatic credit line reviews. Many of Capital One’s cards are advertised as automatically considering accounts for a higher credit line in as little as six months.
Request an Increase From Your Credit Card Issuer
If you need a credit card limit increase and you didn’t receive one automatically, then you can always request an increase directly from your card issuer. You can make the request over the phone, through an online chat, or by sending a secured online message. When you request a credit line increase, this gives you an opportunity to update your income information. You can include additional income from a raise or from money you make on the side. You can also include any government benefits, child support or spousal support, retirement distributions, and other income. It’s even an option to include the income of your spouse or domestic partner, so long as you can use those funds to repay a loan. And if all else fails, a card issuer may only grant a credit limit increase when you agree to move a portion of your credit from a different credit card account with the same issuer. In this case, your total credit limit isn’t increased, but you can use that particular credit card account to make more charges. Note that to process your request, your card issuer may do a hard or a soft pull on your credit. Soft credit inquiries have no effect on your credit. A hard inquiry can affect your credit, especially if you have numerous hard pulls on your file within a short period of time.
Increase Your Security Deposit
If you have a secured credit card, then your credit limit is a function of the amount of your refundable security deposit. Secured credit cards work much like standard, unsecured cards, but they require the payment of a refundable security deposit before you can open an account. With most secured credit cards, the amount of your security deposit becomes the amount of your available line of credit. Therefore, the easy way to get a credit limit increase for a secured credit card is to place more money on deposit. However, many secured cards have a limit on the amount of your deposit, which will create a ceiling for your maximum possible credit limit.
Benefits of Increasing Your Credit Limit
There are several benefits to having an increased credit limit. Obviously, you have more money that you can spend on that credit card. So if you need to make a large purchase, or if you know that you’re going to need to make many smaller purchases, having a larger credit limit will increase the total amount that you can purchase. For example, if you are traveling a lot in a month, you’ll want to make sure that your credit limit is large enough to cover all of the charges you anticipate, as well as any unexpected ones. Having a larger credit limit can also improve your credit score. A large part of your credit score is your credit utilization ratio. An important credit card term to know, this is the total amount of debt you have divided by the total amount of credit you’ve been extended. The lower your debt to credit ratio is, the higher your credit score will be. One way to lower your credit utilization ratio is to decrease your debt. However, you can also lower your credit utilization ratio by increasing your available credit. You can do this by applying for new lines of credit or by increasing the credit limit on your existing accounts. If you do opt for a new credit card, you may consider getting credit card pre-approval first to assess your odds of approval.
Differences Between Total Credit Limit and Available Credit Limit
Your total credit limit is the amount that you can borrow from a particular account. Your available credit limit, on the other hand, is the amount remaining that you haven’t used. To find your available credit limit, subtract your current balance from your total credit limit. This information is also likely to appear on your monthly credit card statements.
What to Do if Your Credit Limit Increase Is Denied
Any time you apply for a new or increased line of credit, it’s possible to get denied. If your application for a credit limit increase isn’t approved, then you’ll want to contact the card issuer and ask why. In fact, the law gives you the right to receive an explanation any time you’re declined for new credit or a credit limit increase.Possible reasons for having your request for a credit limit increase denied can include:
Too much outstanding debt
Too many new accounts
A poor payment history
Insufficient income
However, you may be able to fix some of these issues. For example, you could pay down some of your outstanding debt. If you understand how credit card payments work, then you know that you can pay down your balance before the statement closing date, and you’ll have a lower outstanding balance on your credit reports. Or, you could increase the amount of income you report, such as by adding the income from investments, government benefits, and spousal benefits. You’re even permitted to report the income of your spouse or domestic partner, as long as you have a reasonable expectation of accessing those funds for the purpose of repaying a loan.
Fees Associated With a Credit Limit Increase
There aren’t any fees associated with requesting or receiving a credit limit increase. To the contrary, you could possibly face an over-the-limit fee if you make charges to an account that exceeds your current credit limit. However, these fees have become extremely rare, and it’s unclear if any card issuer still imposes them.
The Takeaway
Your credit card’s credit limit is one of its most important features, and it’s crucial to understand how it works. For most credit card users, there will come a time when you will need a larger line of credit, and you should know how to request it. Once you understand how credit limits work and how to increase your credit card limit, you’ll be in a better position to manage your credit cards responsibly and use them to their potential. Part of this also comes down to finding the right credit card for your needs. Lantern by Sofi makes comparing credit cards easy thanks to its credit card marketplace. You can see the credit score generally needed for a card, its typical APR range, and any notable features, so you can easily sort through the credit card options available to you.
Frequently Asked Questions
Is it good to increase my credit card limit?
How long does it take before credit cards increase limits?
How many times can I request a higher credit limit?
What happens if I exceed my credit limit?
Photo credit: iStock/LaylaBird
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About the Author
Jason Steele
Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
