Credit cards are a wonderful solution to instant funds. However, it is even better when you get a credit card with high credit limits. It is important to keep in mind that the chances of a high credit limit depends on your eligibility and the lender’s terms and conditions.
Accessing a higher credit limit is beneficial for several reasons such as when you need instant access to funds, you have a vacation planned, or just for your everyday groceries.
In case the expense is higher than the limit, getting the credit card limit increased may be a viable option. Let’s examine the strategies required for getting your credit limit increased.
What is a credit limit and how is it determined?
In simple terms, a credit limit is the maximum amount of money that your credit card company is ready to extend to you for using your card. This credit card limit is pre-determined before your card is offered to you. If you spend beyond this limit, you will be charged a fee and this will be added to your credit balance, a situation that can potentially impact your credit score.
Your credit card limit is determined during the approval of your credit card application. Your credit company factors in your credit score, repayment history, credit utilisation ratio, income sources, and how much credit card debt you are currently servicing before fixing a limit on your new credit. The credit limit is to restrict you from overspending and getting into debt.
Strategies for increasing your credit card limit without stress
- Acquire a new credit card with a higher limit
The fastest way to get a credit card limit increase is to acquire a new card with a higher credit limit. This way, your credit is spread over more cards and you can obtain a good credit score if you clear your balances promptly.
- Speak to your credit card provider
If you can’t get through on the option above, you can contact your credit card provider to request a credit increase. You must justify your request by proving that you have new sources of income and that increasing your credit limit will enable you to meet your financial goals faster. You can place your request online or by calling up your card issuer.
- Keep patience to increase your credit limit
They say “The patient dog eats the fattest bone,” right? Maybe this is also true when it comes to a credit card limit increase. Over time, your credit card issuer may increase your credit limit without any overt requests from your end. Card providers periodically review a customer’s credit card usage, payment pattern, credit utilisation ratio, sources of income, and other general factors. Based on a good assessment, they may increase the credit card limit considerably without any external persuasion.
Factors that may work in your favour for a credit card limit increase
– Always pay your credit card balance on time and in full every month. You must demonstrate good financial behaviour in clearing your full debt every month to convince your credit card provider that you can take on additional funding.
– Reduce your credit utilization ratio. Spending way below your available credit or credit limit is best to demonstrate you are not a financial risk to yourself. The amount of credit you spend each month out of what is available or permitted is your utilization ratio.
– Do not be too persistent and apply too many times. When you press credit card companies too hard to increase your limit, they pull your data from credit bureaus for review. This hard pull may impact your credit score if unsavoury data is uncovered in your report.
– Reduce outstanding debt on other liabilities. Pay up your debt on your vehicle and clear your remaining mortgages to demonstrate that your credit card bill is the only payment you are faced with every month. When it becomes apparent that you have multiple debts, your request to increase your credit limit will not work.
– You can take the family route and add on a family member to use a credit card attached to your main card. The family member must have a high credit limit for this to work, and they must meet their credit card bill payment promptly every time. When they are added to your card, it appears on your credit report and this will ultimately boost your credit limit as well.
Summary:
You can access more funds on your credit card by requesting a credit card limit increase. You can do this by reaching out to your credit card company or by just waiting for them to come around to doing it automatically.
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