A person’s credit card spending limit is a great indicator of their financial health. A high credit card limit indicates a high level of trust that lenders have in the customer. They believe that they are a financially stable person who will pay back their credits on time. There are many advantages to having a high credit card limit. One that many people think of is that it could be useful in medical emergencies.
However, according to the experts at SoFi, one should “be wary of putting big emergency purchases on your credit card.” They recommend an emergency savings fund instead. But, SoFi also acknowledges the many other advantages of a high spending limit. Here are five fantastic steps you can take to increase it today.
1. Simply Apply for a Brand New Credit Card
Here is a quick and simple trick to increase the overall credit limit. Just apply for a new credit card and ask for a higher limit. Credit cards are not all made equal. Each card will have different strengths and weaknesses, and each one has a specific credit limit. By applying for a new card, the applicant builds off their existing credit cards. In this way, their overall credit spending limit increases.
2. Invest with Your Local Bank
Another way to get a higher card limit is by investing with the local bank. These investments are not complicated and can be as simple as opening a Fixed Deposit account. It helps to have all of your money in a single bank account to show the bank one’s total financial standing. Banks increase the credit card limit when someone invests.
3. Work to Improve Your Credit Score
Of course, a person’s credit score is a vital piece of how one’s credit card spending limit is determined. A high credit score will lead to a high spending limit because it indicates a trustworthy borrower. A good borrower pays their credits on time and is not a risk to the bank. If you have a low credit score, there are ways to improve it that you can try. Always pay dues on time and never max out the credit cards. Also, stay below the allotted spending limit until the credit score rises.
4. Increase Your Income and Show Proof
This tip is trickier to do in the short term, but if a person has recently increased their income, they can use it to boost their card’s spending limit. If they got promoted or received a bonus, they can bring in the documentation of a payslip to show the bank that their financial status has changed. Typically, banks will offer higher credit spending limits to those with a higher income.
5. Try to Reduce Your Credit Utilization Ratio
Lastly, having a low credit utilization ratio will help increase a person’s card spending limit. This ratio is what the bank looks at to see if they should approve an increase in credit limit. It measures the credit limit one is currently using against the total credit limit at a person’s disposal. This ratio should be kept under 30%. This low ratio shows the bank that an individual has manageable expenses.
Anyone trying to increase their credit card spending limit should use these five tips immediately. A high credit card limit can be helpful in many situations and increases the buying power of the individual.
