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How a credit card limit increase works (and how to make it work for you)

By ATB Financial 11 July 2024 3 min read

A credit card can be a powerful financial tool. Paying for your wants and needs with a quick tap is convenient. You also get the chance to build good credit and be protected from fraud. 

When you put all your expenses on one card, it’s simple and easy to track all your spending—while earning reward points. And when a card is used correctly, it helps you build good credit.

But before you consider a credit card limit increase, it’s important to figure out whether you’re in the right financial position to add more spending power. If you’re confident in your personal budget, a bigger credit card limit can give you more room to cover a financial emergency, earn more rewards points and avoid overlimit fees. 

You’ll also be able to make larger essential purchases. But a lower limit might be the way to go if you’re currently focused on figuring out what budget is manageable for you and your family.

Personal budgets aside, there are other pros and cons to a credit card limit increase to consider. Let’s dig into what credit card limits are and how they work, so that you can feel confident making decisions that work best for you. 


What is a credit card limit?

The amount you’re qualified to spend is your credit limit. You’ll be assigned a limit when you are offered a credit card. Most credit card providers will penalize card holders who go over their limits.


Increasing your credit card limit

There are a few ways to increase your credit card limit. Occasionally, you may be presented with opportunities to increase your credit limit. If you’d like to initiate the conversation, you can visit your local branch and request an increase. 

You can also call your creditor or financial institution and ask a customer service representative if you’re eligible for an increase. Depending on your credit score, you may be pre-qualified for an increase, which you can choose to accept.

Before you seek out a credit limit increase, consider sitting down and creating a personal or family budget. This budget will help you evaluate whether an increase, and any additional payments, will be manageable within the budget you’ve created. 


Should you increase your credit card limit?

If you consistently make monthly payments and you’re tracking a budget, you might be ready to take an opportunity to increase your limit.

But before accepting any increase, take the time to consider how you currently manage your credit card payments and whether you’re due for any major life changes. If your monthly payments already feel unmanageable and you’re not confident about potentially increasing them, it’s perfectly OK to delay a credit card limit increase. Your bank should never increase your limit without your permission. 


The impact of a higher limit on your credit score

Increasing your credit limit doesn’t not hurt your credit score, but it will likely have an effect on how you spend your money. 

A higher limit means more room to manage emergencies. If you’re confident that you can manage the increase, it’s worth accepting. If you think you need to rethink your budget, it’s OK to decline the offer, too. There is also no limit to how many payments you can make on your balance every month.

If you have multiple credit cards, you might wonder which card’s limit to increase. Take into account potential rewards points, interest rates, and how long you’ve had the card. If it’s an older credit card with a good credit history, it might be the right choice. But if you like to travel and have another card with travel rewards points, perhaps that is the right decision.


Monitoring your spending 

Your credit card, like any financial tool, should be used responsibly. It’s important to know what limitations you have before you begin using your credit card.
If you exceed a credit limit, your card will likely be declined. There may be cases where you incur penalties. 

Always focus on how much money you need and how you can successfully keep a low of zero balance on your credit—even with a limit increase— each month. 


Interested in discussing your credit limit? Get in touch with our Customer Care Centre at 1-800-332-8383 or visit your local branch.

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