Many people assume that increasing the limit on your credit cards is an irresponsible thing to do. However, so long as can control your spending, increasing your credit card limits has several benefits.
For example, it creates a larger cushion between your overall debt to available credit. (This is also referred to as your Utilization Ratio).
By increasing your Utilization Ratio you improve your credit score and appear more credit worthy to potential lenders. Further, having a greater available balance of credit shows lenders that you are able to exercise self-discipline and control. This is definitely an attractive characteristic, especially to potential mortgage lenders.
Furthermore, increasing your credit limit can give you peace of mind since is provides a cash option in case of emergency. This may be the next best thing if you don’t have a large savings account to call on in the event of unexpected medical or legal expenses.
The three ways to increase your credit limit.
1. Log Online – many credit card companies now provide an easy link within the online account interface. For example, the Orchard Bank MasterCard provides a link right from your online account.
2. Call Your Bank – This is also an easy and effective way to negotiate for a higher credit limit. However, you must be diplomatic. Don’t tell them you need to increase your credit for a gambling trip to Atlantic City. Instead, you should justify your request with legitimate reasons, e.g. you like the card and want to make it your “primary card”, you want to do a balance transfer, etc.
3. Write a Letter – This may be more effective than a phone call because it shows you are serious about your business relationship with your bank. Plus, it is more likely to get into the hands of the “decision maker.” Here are a few tips to requesting a credit limit increase with a written letter.
Make sure to mail it to the proper destination. (Don’t send it to the payment processing address. Look for the “Correspondence Address” on your credit card statement.)
Be diplomatic – see number 2 above.
Don’t wait until your card is maxed out before asking for an increase.
Be Precise. Tell them exactly what you want, e.g. “I request that you increase my credit limit from $1,000 to $2,500…”
If you are looking for a company who provides periodic credit limit increases, we suggest a secured credit card. They periodically review your account and give liberal credit limit increases to those account holders who demonstrated on time payment ability.