If My Credit Card Just Increased My Limit Can I Ask for a Increase Again? Reddit

Credit limit increases are a double-edged sword. On one paw, accepting your credit limit increase can improve your credit score. On the other paw, having more credit can exist risky. If you're non careful, it can lead to greater amounts of debt. Then what should you do if your credit card company offers yous a credit limit increase? Similar well-nigh things financial, the answer is "it depends." Here are the pros and cons of such an offer. The next time you go a credit increase offer, yous'll know how to clarify the situation. Then y'all can make a decision that is right for y'all.

Advantages of a Higher Credit Limit

Credit Utilization

When y'all accept a credit limit increase, it can result in a lower credit utilization. Of course, that'southward assuming you human action responsibly and don't increase your spending. Why is this a good thing? Credit utilization refers to the amount of credit you're currently using compared to the total corporeality of credit you have available.

Credit reporting agencies such as Equifax and TransUnion use credit utilization to help summate your credit score. In fact, 30% of your credit score is based on credit utilization. Here's a quick instance. Let's say you take a single credit carte du jour with a $5,000 credit limit and a $2,500 unpaid residue. Y'all are utilizing 50% of your available credit. If your credit limit increases to $vii,500, your $ii,500 balance becomes 33.25% of your available credit. Again, that assumes y'all don't instantly use the higher credit limit to spend more. The lower you proceed your credit utilization over time, the higher your credit score.

Financial Emergencies

Credit often isn't something you lot tin get out and go when you badly need information technology. In virtually cases, credit is earned by existence disciplined and responsible over the long term. If you don't max out your credit cards or neglect to pay your bills, your credit will be in a healthy state. That'due south a good thing in the event of an unexpected emergency.

If you suddenly find yourself needing to use a lot of credit considering of a job loss or unexpected medical bill, you'll be glad to accept the space on your limits. Additional credit can serve every bit a rainy twenty-four hours fund of sorts. If you run into an emergency, you lot'll be glad you have a fiscal cushion to rely on. Sure, you still have to pay it back at some point. Just in a dire situation, you want to exist able to say "just accuse it."

For this reason, you may desire to accept the side by side fourth dimension you lot're offered a credit limit increment. Then do your all-time to never use it — unless you absolutely have to. Of course, it would be all-time to always have an emergency fund of three-to-half-dozen months of living expenses parked in a savings account. However, if that's not possible, increasing your bachelor credit is an okay fail safe. At that place may be times when you lot'll accept to turn to credit for financial back up in an emergency. What'southward that old saying? Better to take it and not demand it, than to need it and not have it.

Rewards

Rewards are role of the credit carte manufacture. There'due south nothing incorrect with taking advantage of the incentives provided by the manufacture. A higher credit limit can come with more access to reward points. If used responsibly (and being responsible is the key), a college credit limit can permit you to shift more of your daily spending to a credit card. That can lead to more advantage points – whether for travel, merchandise, or events.

The reality is that you tin accumulate a lot of rewards points past making sizable purchases with your credit bill of fare. If y'all are careful, you lot can literally employ your card for almost everything instead of using cash or a debit carte. You can fifty-fifty pay your taxes with a credit menu, and reap the reward points. (Just be sure that the rewards are worth more than any fees the IRS might charge for paying via menu.)

Again, the key thing is to not utilize charge more than than you tin afford to pay off. However, if your income will regularly cover information technology, then go ahead and increase that credit limit. Then, apply your card to pay for everything — gas, groceries, utility bills, car payments. Simply zero out your credit card balance at the end of every month and bask the extra freebies.

Disadvantages of a College Credit Limit

Debt

Now for the downsides of accepting a credit limit increase. This may seem obvious, but the biggest downside to a higher limit is the risk of accumulating more debt. The more than available credit yous have, the more than debt you could potentially rack up.

If y'all end up carrying a balance or only paying the minimum each month, you will pay a heavy price. The compounding involvement charges will rapidly grow into a huge pile of debt. If yous fearfulness that the temptation to spend more than volition be besides slap-up, then you probably shouldn't accept a limit increment. Remember the number one dominion of responsible credit use is that yous should simply make purchases that you tin pay off in total by the end of the month.

Higher Interest Rates and Annual Fees

Credit card companies are crafty. They sometimes apply a credit limit increment to push you into a new credit carte du jour. While it does come with more bachelor credit, it might also include a higher involvement rate. Watch out for this tactic. Let's say you have an entry level credit card. It has a limit of $five,000, a bones rewards program, and an involvement charge per unit of 12%. Now, the credit card company is offer to move you upwards to its "platinum" credit card. It gives y'all a $10,000 credit limit, better rewards, only charges an interest rate of eighteen%. And now there'due south a $120 annual fee that you weren't previously paying. Suddenly, it's not that great of a deal.

Call back that credit card companies rarely do anything that isn't in their own all-time interest. A college interest rate may non be worth the boosted credit limit — especially if you have a history of leaving a balance on your card. You may also be required to transfer any balance on your quondam credit card to a new one. That could hateful you instantly start paying more involvement on the same corporeality of debt you had on your previous card. Exist aware of this trickery. Always exist sure to read the fine print of whatsoever agreement that comes with a credit limit increase offering.

Difficult Credit Inquiries

A credit limit increase can actually lower your credit score if it results in what is known as a "difficult enquiry" into your credit history. A limit increase usually comes in one of ii forms. Information technology will exist an offering that says your credit limit has automatically increased (pending your blessing) or a different offer that says yous "might be" eligible for a limit increase. The kickoff offer does not hurt your credit score. It's a reflection that you've been using your available credit responsibly. The credit card company already knows everything they need to know about increasing your limit.

Nonetheless, the second offer tin lower your credit score temporarily since it can outcome in ane or more than inquiries into your credit history – oftentimes in a short menses of time. Credit rating agencies often see multiple credit inquiries as a red flag. For this reason, you should inquire your provider if a "hard inquiry" will be needed before accepting a credit limit increase. If you lot have otherwise decent credit, your score will probably bounce apace. However, it's nonetheless something you lot should be aware of.

The Last Discussion

Equally we said from the starting time, a credit limit increment offer tin can be both good and bad. Whether you should take depends on your personal financial situation and spending habits. The bottom line is that you should proceed with caution and scrutinize whatsoever offer very carefully. If you do have a credit limit increase, make sure information technology really benefits you — and non just the credit card company.

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Source: https://walletgenius.com/credit/when-you-should-and-shouldnt-accept-that-credit-limit-increase-offer/