Should you increase your credit card limit?

There are several factors to consider before you request a credit card limit increase. See some of the advantages and disadvantages.

Your credit limit is the maximum amount you can borrow on a credit card at any one time. The limit is based on how much the lender thinks you can afford to repay. It might be a few hundred pounds or several thousand pounds.

If you want to increase your limit, you’ll need to contact your lender and make a request. You won’t be guaranteed an increase; your bank or lender will review:

  • Your spending history
  • Any missed payments
  • Your credit history and credit rating
  • Your monthly income
  • How long you've had the credit card for
  • If you've applied for a credit limit increase before

What to consider before applying to increase your credit limit

Before you go ahead and make the request, it’s important to think about why you want to increase your credit limit.

You may have a big expense coming up and have assessed from your budget that you could benefit from (and afford) a credit limit increase.

However, needing a credit limit increase to make ends meet could also be an indicator that you’re struggling to manage your finances. In this case, increasing your credit limit could make your financial situation worse.

Another thing to think about is whether an increase in your credit limit could leave you in a vulnerable situation. For example, is it foreseeable that your circumstances could change in the future? And if so, would you still be able to meet your repayments?

What increasing your credit limit can do

As well as giving you more money to spend, increasing your credit card limit can mean:

  • You’ll be less likely to go over your credit limit – so you won’t incur any additional fees or charges
  • You can maintain or improve your credit score – staying within your credit limit indicates that you are able to manage your debt

However:

  • You open the door to more debt – this means more to pay back and more interest charged
  • You might find it more difficult to be approved for other types of loans – the amount of credit you already have is something that lenders look at to assess your creditworthiness
  • You might negatively affect your credit score if you ask for an increase too often

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