Asking for a credit limit increase can be necessary when times are tough and your credit limit doesn't fit your increased spending habits. Many Americans are facing financial hardship due to the ongoing coronavirus pandemic, and requesting a credit limit increase can help ease the burden of stocking up on groceries and other essentials.
But before you ask your card issuer for a credit limit increase, you should consider what potential affect a higher credit limit could have on your credit score and whether an increase will really help your financial situation or only hurt it.
Below, CNBC Select reviews when you should ask for a credit limit increase, how a credit limit increase affects your credit score and the ways to request a credit limit increase.
When you're approved for a credit card, your card issuer will assign you a credit limit. This amount can be anywhere from a couple hundred dollars to tens of thousands of dollars. As the length of time you've had the card increases, typically so will your credit limit. These increases may occur automatically, as prompted by your card issuer.
But there are instances, such as the coronavirus pandemic, that may spur you to ask for a credit limit increase sooner than waiting for an automatic notice.
However you should only ask for a credit limit increase if you're confident that you won't overspend. Any purchases made on your card that aren't paid off by the due date will incur the regular APR, unless you're taking advantage of a 0% APR period. (Learn how 0% APR credit cards work.)
Here are some of the best times to ask for a credit limit increase:
While you may jump at the chance to ask for a credit limit increase if you're strapped for cash, it may be wiser to hold off. Credit limit increases aren't risk-free. You could see a ding in your score if your card issuer pulls your credit report to verify if they should approve a credit limit increase or not.
To play it safe — here are some of the worst times to ask for a credit limit increase:
Credit limit increases can happen automatically with no action on your part, or by your request. Automatic credit limit increases may happen annually or if your card issuer notices you recently updated your income.
If you want to ask for a credit limit increase, it can typically be done in one of two ways: online or over the phone. Online requests can be done via your card issuer's mobile app or by logging into your online account. For instance, if you have the Chase Sapphire Preferred®, Chase's website states you can "sign in to get an instant decision on your credit line increase request."
You can also call your card issuer to discuss an increase and provide your reasoning why. This can be a good idea if you don't have increased income but want to explain your need for more credit and provide reassurance that you can repay it.
When it comes time to make the credit limit increase, make sure you have the following handy:
In most cases, you can expect to receive an instant decision on whether you're approved for a higher credit limit increase, or denied. If you're approved for an increased credit limit, make sure you don't misuse the increased buying power. Continue to make payments on time and in full.