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Credit Card Limits: Going Up or Down?

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I got a pleasant surprise in my mailbox this past weekend. I received a letter from one of my card issuers giving me a credit limit increase.

This was a surprise because I didn’t ask for it. To be honest, when I saw the envelope, my first thought was, “Oh, geez. This must be a notification of a new and outrageously creative fee.” Yes, I’m a tad cynical these days.

Now, to be clear, I received a limit increase on a card that I pay in full every month. So it could be that the issuer feels there’s little risk involved in giving a limit increase to a customer who doesn’t carry a balance.

But, hey, it wasn’t too long ago that even the best cardholders were getting their limits slashed. So I’m hoping this is a sign that credit is loosening up a little out there. If so, perhaps others will get a surprise in the mail. And if you don’t spend up to your new limit, a credit limit increase can lower your revolving credit utilization ratio, a concept you can learn more about in this Credit Card Q&A.

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  • http://www.power9pro.com james

    i think you might be on to something because i also received an increase recently without soliciting for it. the other alternative is that the bank/card issuer simply feels that we’re not spending enough and they hope that by increasing our limits, we will start spending more on that card and carrying a balance–and so actually make real money off us being customers.

  • Brian

    I have had just the opposite happen to me and its frustrating…
    I have had two cards lower limits from where I only had charged 50% of my limit, (my personal rule) to just above what I owed making it look like I was maxed out on my credit limits… In response I had another company close an account that held a zero balance and that I paid off every month…
    This to me seems like a slippery slope and one I am not soon going to be free of…
    I have taken very diligent care to pay my cards on time and not max them out only to have the companies most of which received huge bailouts from the government screw up my credit score by making it appear I can’t manage my credit

  • Beverly Blair Harzog

    James–Congrats on your limit increase. I’ve noticed that credit is loosening up a bit out there. But you’re smart to think about what the issuers might have in mind with the increase! If you don’t take advantage of the extra available credit, though, this will lower your revolving credit ratio. Always a good thing when it comes to credit scores!

    Brian–I understand how frustrating that must be. It sounds like you’ve been paying your bills on time and that’s terrific. One factor that might be working against you is the 50% utilization ratio. Believe it or not, the ratio to shoot for is 10%. Continue to diligently pay your bills and pay attention to lowering your ratio. It will take time, but this wil enhance the impression that you’re handling your credit well. Hang in there!

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