If you are on a vacation, you will inevitably splurge. But then you realize that you have exceeded your credit-card limit and it is a definite downer. Let us take a look at how you can increase your credit card limit without resorting to anything "wrong".
Use your card as much as you can
The chances of increasing your credit-card limit will automatically increase once you start paying for everything with your credit card. Once the issuer sees that you are using your card frequently, and making your payments consistently (at least for a few months), you will succeed in creating a good impression or score in your issuer’s books. Your issuer will automatically begin to consider increasing your credit card limit.
Waiting for your issuer to increase your credit limit based on your usage and payment pattern is a passive technique, where you don't do anything much except bide your time. [RS1] Usually, issuers examine their customers' accounts periodically, which means that if you qualify, your credit limit will be hiked automatically.
Think of a Good and Solid Reason
In case you speak to your issuer about increasing your limit, the company representative might ask you why you need your limit hiked. Usually, issuers don't pry, but if they scan your bank records and see that you are using your credit card to make ends meet, they might be hesitant to grant your request. So, if you have a tight budget, and you will be able to make just the bare minimum payments on your credit card each month, then it would be best if you drop the idea of increasing your credit limit until your financial condition gets better.
Do not be Greedy
If you are desperate, it will show, and this would be a big red signal for your issuer, meaning, your request will most likely be turned down. In many ways, it is like getting a visa – you need to convince them that you deserve it and also give them time to come to a decision on their own. It is better that you don’t harbour unrealistic expectations (for example, a double or triple credit-limit hike). The best way to get a decent limit increase would be to downplay your need; a subtle approach would work best.
Shift the Card Limits
If you have multiple credit cards, you could consider this option. First, decide which card's limit you want to increase and then transfer the limit from your other card or cards to the card you have chosen. This will work as long as both cards are from the same issuer. Also, don’t get rid of the other card or cards as this would reflect badly on your credit score.
All said, if you are one of those people who find themselves very dependent on credit cards to sustain your lifestyle, an introspection about your financial habits would be advisable. Think twice before you apply for increasing your credit-card limit, you could be putting yourself in a vulnerable position.
Disclaimer: Copyright Kotak Mahindra Bank Ltd.
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