Do you need more spending power from your credit cards? For some credit card users, a larger line of credit can be necessary to finance their purchases. And even if you avoid interest by paying off your entire statement balance, your credit limit may be insufficient for your monthly spending needs.
Here are five of the best ways to get the credit limit that you need.
1. Lower Your Balances
As the old adage goes, banks only like to lend money to those who don’t need it. While this isn’t technically true, having a low level of debt will help you to qualify for a credit line increase. From the bank’s perspective, it can be too risky to offer additional credit to someone who has already used up most of their credit line.
In addition, having high levels of debt will negatively impact your credit score, further reducing your chances of a credit line increase. (You can see how your debt levels are affecting your credit scores for free on Credit.com.) So, if possible, you should pay off as much of your outstanding balance as you can, even if it means making a payment early, or fully paying off purchases made since your statement was issued. And if you have outstanding balances with other banks, try pay them off as well, and then wait for your statement to close so that the lower balances are updated on your credit reports. Once you have as few outstanding balances as possible, you will have the best chance of receiving the maximum credit line increase.
Once you have reduced or eliminated as many credit card balances as possible, your next step will be to contact your card issuer and request a credit line increase. While some issuers will allow these requests to be made online, you always have the option of calling and speaking with a representative. At that time, you can let the card issuer know if your household income has risen, or your monthly housing expenses have decreased, which will both be factors in your favor. And remember, the Consumer Financial Protection Bureau amended the Credit CARD Act to allow banks to consider any household income you have access to, which is an important consideration for at-home spouses.
Keep in mind that requesting a credit line increase could create a hard inquiry on your credit report. A hard inquiry can leave a small and temporary ding on your credit score, and not all creditors will make a hard inquiry when you request a limit increase, so it’s important to ask your issuer if it will impact your credit.
Some card issuers allow you to transfer your line of credit from one card to another, increasing your spending power on the product you prefer to use. While this step, by itself, will not increase your total credit limit, it can be helpful if you have a particularly good rewards credit card that you favor (here are some of the best rewards credit cards in America) over another that you are unable to fully utilize due to a low credit limit. For example, those who travel for business may want to have the ability to make all their travel purchases from their favorite airline credit card, to earn the most miles and to utilize all of its travel benefits.
4. Apply for New Cards
If your current credit card issuers are unwilling to increase the credit limit on your cards, then you might try opening an account with a different card issuer. The new account will offer an additional line of credit, and you may also receive a valuable sign-up bonus, promotional financing offer or both. But just like those who ask for an increased line of credit on their existing accounts, you will want to pay down as many outstanding balances as possible, and wait for each statement cycle to close, before making an application for new credit.
5. Consider a Charge Card
Unlike credit cards, charge cards do not have a preset spending limit. So as long as your creditworthiness remains high, you can be granted increasing lines of credit as necessary, without having to request an increase each time. But unlike credit cards, you will have to pay each month’s statement balance in full.
More on Credit Cards:
- How to Lower Your Credit Card Interest Rates
- 6 Smart Credit Card Strategies
- Tips for Paying Off Credit Card Debt