Increasing The Limit On Your Credit Card
Written by: Rebecca Robinson
Maxed out your Credit Card?
You have a credit card that is maxed out, you may need to increase the limit to make a specific purchase with the intention of paying it back as soon as possible or you may be wanting to take out a new 0% interest card to transfer the balance. Firstly, you shouldn’t want to increase your limit out of desperation because you are short of cash one month and therefore get further into debt. If that is the case, look at other ways of budgeting and saving money, credit cards can be a very expensive form of borrowing so should be used wisely.
How is your credit rating?
Let’s say you are going on holiday and would prefer to book on your credit card to benefit from certain protection than if you paid by debit card or cash, but there’s not enough balance left, then you can ask your lender to raise your credit limit. They will look into how long you have had the card, whether you have made regular payments and what your credit rating is like. As a general rule, most companies may want to wait at least 3 to 6 months before reviewing your limit and there is nothing stopping them from saying no. For purchases you want to make on your credit card but may not have enough balance left, consider using any savings to pay off as much as possible and hopefully freeing up enough balance to make your purchase.
Balance Transfer Credit Cards
Perhaps you have applied for a 0% interest card to transfer your balance from another card. The balance you want to transfer is £3000 but even though the new credit card company has accepted your application, they only offer a limit of £1500. As irritating as this may be, don’t cut your nose off to spite your face just yet!
The limit which is offered to you is dependent on your income, other debt, repayment history and your credit rating. As a rule of thumb, the lenders more likely to accept your application are also those who have the lower limits and those which offer higher limits are often the most difficult to be accepted by. More importantly, every time you apply for a credit card, your credit rating is affected. A record of your search is logged on your file and because it will state you have another credit card available to you, it can make it more difficult to be accepted for an another card, even if you never use the first one. So while it may be tempting to cancel the card, it will probably hurt you more than the credit card company and reduce your chances of getting more credit.
If you only have a £1500 limit but that is at 0%, then transfer that amount onto the new card. That way, at least half of your debt is interest free and that alone could save you over £200 in interest the following year. There is nothing saying you have to transfer balances to one card only, so you can always apply for another interest free card and transfer the remaining balance onto that. Providing you are accepted with a limit of £1500 or more, that is your full £3000 now with 0% interest.
Credit Card borrowing can be expensive
Be wary of applying for too much credit though, that alone can diminish your chances of being accepted. If used correctly, credit cards can be a cheap way of borrowing but also the most expensive if not used correctly!
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