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I've had my credit card for about 4 or 5 years now, got it when I was 18, and my line of credit on it is $3500 as of a month ago. I got it increased to $1500 from $500 last year, and just never thought about asking for an increase before that.

I never really use more than $700 on it each month, but increased it lower my credit utilization to try to improve my credit score. I pay it off in full on-time every month so I'm not worried about spending more than I have.

After 4 or 5 years with this card should I have a higher line of credit? Is there average line of credit on credit cards for this type of thing?

EDIT: Clarified wording on when my credit increased

  • I didn't know about the utilization rate, however I keep my credit card limit down to about 2-3x my spending on that card. The idea being in case it gets stolen I don't want 30k of purchases on the card. Fraud protection hopefully kicks in well before then and I'm sure Ill be able to dispute the charges cleanly but why leave the opportunity? – jmathew Jul 17 '17 at 16:46
  • Typically you are only responsible for the first $50 if someone was to steal your card... and you can probably even get that waived. I'd suggest you open a few cards even if you don't use them at all. This will decrease your utilization rate. – Matthew Whited Jul 17 '17 at 20:28
  • It's more important to have 2 cards at $3,500 rather than one at $7,000. There is no worse feeling than having your main CC lost or locked up during a fraud/identify theft case and not having an alternate CC. As with jumping jobs, I've found the best bump to come from applying elsewhere :) – MonkeyZeus Jul 18 '17 at 2:13
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There is no "golden rule" on how high of a credit limit an individual should have. There are 22 year olds that have $100,000 credit limits and 40 year olds that have $1000. The most important thing is to not over spend and pay your balance(s) in full every month. Seeing as you are doing that now, there is no downside to getting an increase.

  • My primary bank offers me 1k credit card and one year later I'm still at 1k, made every payment, and they still won't budge off that 1k. I think my history with them from when I was 22 y.o. is haunting me a bit. It has to be that because I recently applied for a new card with a different bank and received a 4800 limit. – Xalorous Jul 17 '17 at 15:53
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As long as you're not trying to get a higher limit in order to actually spend more money, or might be tempted to do so, it's generally advantageous to have a higher limit if available. A large part of credit score is based on utilization rate (balance due at statement closing divided by credit limit). Basically, you want more than 0% and less than 30% or preferably less than 10% used. Doubling your credit limit halves your utilization rate. And it can be comforting to have it there "in case you need it" in some sort of emergency scenario.

Caveats:

  • Some credit cards do a "hard pull" of your credit report if you ask for a higher limit. This can lower your credit score slightly for a short time, though generally isn't a big deal unless you're requesting more credit all the time.
  • It's conceivable that for some larger credit application that isn't entirely score based and has more human oversight, like for a mortgage, if you have a lot of unused credit, you may be asked about it, and potentially even asked to have some credit limits lowered. Basically, if you could at any given moment suddenly get in debt for hundreds of thousands of dollars, that might look like a risk to the bank you're now trying to get a loan from. This isn't that likely to actually happen, especially if your credit history shows you generally being responsible, but it's not completely unheard of.
  • If you ever get in the mindset when you charge something on a credit card that "I'm not really spending the money now," you can be in a world of pain very quickly. This can be compounded if you have high limits, and don't realize how much you're spending. Credit cards are very useful tools, but money you spend on them is as much spent as if you paid for it with any other technique.

There's no "right" or "default" amount of credit that you "should have" at any given point in your life. If you're using credit responsibly, and don't need more credit, there's no particular reason to ask for more credit. If you work at it and are patient, it's easy to eventually have tens of thousands of dollars of unused credit limits, but that doesn't really get you anywhere you need to be by itself.

  • I note that keeping a lot of credit around "in case of emergency" is tempting, but dangerous. Suppose something has gone so wrong in your life that you need to get your hands on $5000 cash RIGHT NOW. Does it seem likely that this is coincidentally also a time in your life when taking on a large debt is a great idea? Far better to have that $5K sitting in a term deposit earning interest, that can be withdrawn for no penalty other than losing some interest. – Eric Lippert Jul 17 '17 at 22:01
  • @EricLippert Oh, absolutely. I was trying to say that, by saying that anything you're spending on a credit card really is money that you're spending. But having a larger limit can sometimes give you some amount of comfort, that there are more options that will be available to you. But don't get a higher credit limit and actually plan to spend more money! (And thanks for commenting. I'm a big fan.) – user42405 Jul 17 '17 at 23:56
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If you want to stay in the sub 30% range to avoid 'high utilization' on your card, make sure your credit is > 3.33x your usage. For your numbers, a 2500 limit would probably keep you out of 'high utilization'.

The primary reason to do this is to stay off your lender's 'high risk' list. Due to the risk perceived by CCC's, accounts with greater than 30% utilization are reported as high utilization.

Keep in mind that utilization does not have a history. So you can drop your utilization a couple of billing cycles before you apply for a high cost item (e.g. car or house) and your score should bump up a bit.

  • Correct answer IMHO and it deserved a reference: creditcards.com/credit-card-news/… Credit Utilization is a KEY RATIO!.. I speak from experience. I had my Amex through US Bank who would not raise my credit from $1,000 which is paltry for my usage. I got a card directly from Amex (and ditched the US Bank one) who raised it gradually from $1,000 to $7,000 and as a direct result I saw my FICO go up almost 30 points. I never keep a balance on the card or use more than 30% (about 2K) – MikeM Jul 17 '17 at 23:45
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I wouldn't say you should have any particular limit, but it can't hurt to have a higher limit. I'd always accept the increase when offered, and feel free to request it sometimes, just make sure you find out if it will be a hard or soft inquiry, and pass on the hard inquires. From my own experience, there doesn't seem to be any rhyme or reason to the increases. I believe each bank acts differently based on the customer's credit, income, and even the bank's personal quotas or goals for that period. Here is some anecdotal evidence of this:

I got my first credit card when I was 18 years old and a freshman in college. It had a limit of $500 at the time. I never asked for a credit line increase, but always accepted when offered one, and sometimes they didn't even ask, and in the last 20 years it worked it's way up to $25K. Another card with the same bank went from $5K to $15K in about 10 years. About 6 years ago I added two cards, one with a $5K limit and one with a $3K limit. I didn't ask for increases on those either, and today the 5K is up to $22K, and the 3K is still at $3K.

An even larger disparity exists on the business side. Years ago I had two business credit cards with different banks. At one point in time both were maxed out for about 6 months and only minimums were being paid. Bank 1 started lowering my credit limit as I started to pay off the card, eventually prompting me to cancel the card when it was paid in full. At the same time Bank 2 kept raising my limit to give me more breathing room in case I needed it. Obviously Bank 1 didn't want my business, and Bank 2 did. Less than a year later both cards were paid off in full, and you can guess which bank I chose to do all of my business with after that.

1

I'm the contrarian on this forum. Since you asked a "should I ..." question, I'm free to answer "No, you shouldn't increase your limit. Instead, you should close it out".

A credit card is a money pump - it pumps money from your account to the bank's profit margins. When I look at my furniture and the bank's furniture, I know exactly who needs my money more (hint: it's not the bank).

Credit cards change people's spending patterns. In my first day of training as a Sears salesman, the use of the card was drummed into our heads. People purchase on average 25% more when they use a card than when they pay cash. That's good if you're a retailer or the lender (at that time Sears was both), but no good if you're a consumer.

Build up a $1,000 emergency fund (for emergencies only, not "I need a quick latte because I stayed up too late last night"), then savings for 6 to 12 months living expenses. Close and cut up the credit card. Save up and pay cash for everything except possibly your house mortgage. If you have that much cash in the bank, the bankers will be as willing to talk to you as if you had an 800+ score.

I have lived both with and without debt. Life without debt is well worth the short term sacrifice early on.

  • "People purchase on average 25% more when they use a card than when they pay cash" - but is that because the people who prefer to use cash are typically more tight-fisted? If so, what you need to do, is to become more tight-fisted, not change how you pay. (I am here only talking about people who pay the card in full each month.) In other words, correlation is not causation. – Martin Bonner supports Monica Jul 18 '17 at 12:16
  • I agree, it is all about the behavior, and it is indeed a "chicken and egg" question. From my experience, going from a card to cash economy, paying cash make and keeps you frugal. When you pay cash, it's almost physically painful to let go because you see all that money changing hands. When you use a card, the money is abstract and distant. There is no difference when it's 1 dollar or 10000 dollars, until a month later when the bills come due. – pojo-guy Jul 18 '17 at 12:18
  • As a frivolous spendthrift I wish I could consume as many lattes as the frugal savers seem to think I enjoy each week. – jwg Jul 18 '17 at 13:35
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I'm not sure that OP was asking if he/she personally should have more available credit, so I will answer the other interpretation: should that particular card have a higher limit?

The answer is "no." The range varies vastly by issuer. Starting limits vary widely from issuer to issuer even with identical credit histories. Some issuers never automatically increase the limit, some periodically conduct account reviews to determine if an increase is warranted. Some like to see higher spending habits each month. Personally, my cards range from $500 to $25000, and the high and low extremes are the same age.

You can search for tips on how often to request increases for your particular card, or what kind of spending habits the issuer prefers. An important note: You do not need to carry a balance to make the issuer happy. You never need to pay a cent in credit card interest.

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