If you’ve ever looked at your available credit on your credit card and found that it was nowhere near the limit, you might wonder how to increase your credit card limit.
There are lots of reasons why you might want more available credit whether it’s to carry out an important purchase or because you can earn more rewards with higher limits on certain cards.
The good news is that there are actually several different ways to do this, and we’re going to take a look at seven simple tips for how to increase your credit card limit instantly.
1) Check If You Have an Annual Fee
If you have an annual fee, then you might want to consider getting a card without an annual fee.
This way, you won’t be paying anything extra on top of the credit card limit that you’re requesting.
The lower your balance is, the better chance you’ll have at increasing your limit.
Requesting an increase in advance will give them more time to process it and get back with you with their decision.
You may need a bigger limit because your spending habits have changed, or because of life changes like having kids or being promoted at work.
2) Call and Ask for a Higher Limit
If you have a decent credit score, the best way to increase your limit is by calling and asking for it.
It’s so simple! Just pick up the phone and call the number on the back of your card.
If you aren’t comfortable doing this, there are plenty of other ways to increase your limit.
For example, if you have a large deposit in an account with that bank, they may be more willing to raise your limit.
Another thing you can do is ask your current lender for another line of credit.
They might be able to give you a better rate as well as boost your limit.
Finally, just make sure you’re using most or all of the amount available on your current line of credit before requesting more money from them.
3) Use Your Credit Card More Often
Credit card utilization ratio (or percentage) is a measure of how much you owe on your credit cards compared to the limit.
The lower your credit card utilization, the better your score will be.
If you have a $5,000 limit and only use $2,000 of it, then you have a 50% credit card utilization ratio.
If you are using all of the available funds on your credit card, that’s 100% utilization which usually translates into worse scores.
So get those purchases out of your wallet and onto your credit card! You’ll increase your credit limit as well as your credit card utilization ratio.
Plus, if you’re one of those people who likes to hoard cash at home or in the bank, this can help you develop more discipline with money management.
4)Keep Your Utilization Rate Low
It’s important that your credit card utilization ratio does not exceed 30%. Utilization ratio is the percentage of your credit in use.
So if you have a $1,000 limit and only owe $100, then the utilization rate is 10%. If you have a $1,000 limit and owe $900, then the utilization rate is 90%.
The best way to increase your credit card limit is by keeping your balance low.
The second way to increase your credit card limit is by making on-time payments.
The third way to increase your credit card limit is by paying off any old balances that are over 60 days old.
Lastly, ask for an increased credit line with your current bank or request one with a new bank.
Make sure you call up the customer service department of your credit card company and be polite about it.
Remember: always make sure to read your monthly statement carefully so that there aren’t any errors such as incorrect interest rates or other charges.
5)Pay Your Bills On Time
By ensuring that you pay your bills on time, you will increase your credit score. This will allow you to have a higher credit limit on your card.
If you are having trouble paying off your balance each month, it may be wise to rethink how much debt you are taking on.
Also, if you’re carrying a balance from one card to the next because you don’t want to close out the account and lose your points, ask yourself whether or not those rewards really make up for the interest rate.
And remember: even if you do manage to make all of the payments on time for six months straight, banks still have the power to lower your limit or cancel the card at any time.
6)Maintain a Good Credit Score
To maintain a good credit score, you need to make sure that your debt-to-credit ratio is less than 30%.
This basically means that the total of all your credit card balances should be less than 30% of the total available credit on all of your cards.
To calculate this, just take the amount of debt you have on any one card and divide by the credit limit for that particular card.
If your balance divided by the credit limit exceeds 30%, then it’s time to make some adjustments in order to get back below that threshold.
If you are carrying a balance on more than one card, it’s best if you consolidate them into one low-interest rate card.
The lower the interest rate, the better off you will be as you’ll save money over time.
One way to accomplish this is by transferring your balance from one credit card with a high interest rate to another with a lower interest cost.
Another strategy is moving your balance from multiple credit cards with high rates onto a single line of credit like an auto loan or mortgage with its own terms, which will usually have lower rates than those on other loans.
7)Apply for a New Credit Card
One of the best ways to increase your credit card limit is to apply for a new credit card.
You’ll often get approved with a higher limit if you’re already in good standing with the bank.
Plus, there are other benefits such as getting more cash back, free travel insurance and more perks.
The downside? It’s an additional hard inquiry on your credit report which could lower your score by a few points.
But considering how much interest rates go up when you’re maxed out, it can be worth it! But beware that cards come with high annual fees, so make sure you read the terms before applying.