If you're thinking about a higher limit on your credit card, start following these five simple tips now to improve your chances.
Obtaining a higher credit card limit is similar to the process of obtaining a credit card. The financial institution will assess your financial history and your capacity to repay the debt. The limit you are given is dependent on many factors and the criteria is different for each bank. However, there are some general principles you can follow to improve your chances of obtaining a higher limit.
1. Always pay your bill
When the bank assesses your limit increase application, they need to feel there is a very good chance they will get their money back if they lend it to you.
The best way to demonstrate that is to always pay your bill in full, on time. You don't necessarily need to pay your entire balance, just a bit more than the minimum repayment each month.
Consistent, regular payments (e.g. $20 a week) are better than lump say payments. They demonstrate financial discipline and routine.
2. Pay on time
If you're late with your payments, you're demonstrating you're unreliable. Every dollar the bank has to spend chasing you for payment (in reminder notices, collection activates etc) is another dollar they don’t receive in profit.
Also, you'll be hit with a late payment fee which can range from $15-$50.
3. Use your card
Don't make the mistake of not using your card, or of using it only for emergencies. A credit history with a lot of use shows you are confident in your spending habits and your ability to repay the credit.
4. Pay interest
Like with any investment, the bank wants to see evidence they will receive a return, which means interest. You need to walk a fine line here - you want the occasional interest payment to get the bank's attention, but not so often that you have large outstanding balances.
5. Don't spend more than your limit
Show the bank you have the financial discipline to only spend within your existing limit. By doing this, you'll also avoid any over-limit fees.
