141

The offer of an increased credit limit may be a sign of increased confidence. However from a bank's point of view it is an attempt to get you to spend more and thus make more money from you. Decreasing your APR however will result in them making less money from you. There is no equivalence.


100

After this happened the second time, I wonder if there could be a "catch" on this. No I mean, what is my bank's real motivation for allowing me to spend more money. Credit card companies make money in a few ways. Whenever you buy something on the card they get a cut of the merchant fees, the more you buy on the card the more money they make. When ...


24

There are two very small catches. You have just increased your available credit. In some cases when you want to make a loan, they will check your available credit against your creditworthiness (your income and credit history). In the short term with a greater credit limit, you may have more difficulty getting a large loan. On the other hand, your greater ...


22

Short answer, take the credit line increase. It will help your utilization ratio, which is a significant part of your credit score. Just exercise discipline to not USE the extra credit line to get back in the same spot you are in now. Your credit utilization is based on what is reported to the Credit agencies at the end of the month by your credit card. ...


19

There is only a catch if you swallow the hook. The hook is that the bank hopes you will use the increased credit limit to buy more stuff, and not pay what you owe before the interest-free period expires. This will allow them to charge their high interest rate on the outstanding balance. Now if you don't increase your spending, and keep paying your balance ...


19

There is one massive catch in this which I found out when I went to Nationwide to ask for a loan. I've got a credit card which they kept increasing my credit limit, it's now at something ridiculous - nearly £10,000 but they keep increasing it. I never use that card, when I went to Nationwide though they said they couldn't give me a loan because I had £10,...


17

I don't think your problem is payment timing - it's credit utilization. You are using a relatively high percentage of your credit limit each month (despite the fact that you pay it off on time). Rightly so, this in considered a risk by the credit agencies (what happens if you can't pay the balance for some reason?) Based on this, here are some options: ...


17

The most important number on your credit card statement is not your available credit. The number you should be focusing on is your account balance. Before the refund, you had a balance of $0. That means that you did not owe the bank anything. You then got a $400 refund. This put your account balance at +$400 (sometimes shown on your statement as $400 CR)....


16

You are correct. If you paid your bill and then received a refund, now the credit card (bank) owes you $400. You can spend $400 without owing anything. Or, if you do nothing and don't use the card anymore, after a while they'll probably send you a check for $400. Or, if you don't plan on using the card anymore, you could call them and ask them to send you a ...


15

You are misunderstanding utilization. You do not need to carry a balance past the due date to create utilization, in general carrying a balance past the due date is not a good idea. The best practice is to always pay off each month's balance when you receive your statement. (I'm sure there's some tiny exception in there somewhere, but for normal people--just ...


12

I've written a number of answers to this effect but my philosophy is just call and ask. Always be nice, but just ask. The worst possible outcome is no change. You can rationalize your way to any outcome. No, they won't lower this because this stream of logic. Yes, you can do this because of this stream of logic. You never carry a balance so the ...


11

The minimum amount is set by the merchant services provider based on the kind of business, its location and the history. It mostly has nothing to do with you personally. However, the minimum amount differs based on the kind of credit cards being used. For example, foreign credit cards will require signatures on much lower amounts than domestic. In my local ...


11

The only drawback is if you spend more than you can with the new limit and end up having to pay interest if you can't pay the balance in full. Other than that, there are no drawbacks to getting a credit increase. On the flip side, it's actually good for you. It shows that the banks trust you with more credit, and it also decreases your credit utilization ...


10

What you're referring to is Visa Easy Payment Services (VEPS). Other payment processors have similar programs. Basically, certain merchants (based on merchant category code - or MCC), are not required to obtain a signature under $50. This limit was raised to $50 from $25 last year. Here is the press release from Visa describing the increase, and the program ...


8

Some aspects of your general financial lifestyle make a big difference in your score. Always pay late; declare bankruptcy; have bills go to collection, these will hurt your overall score. Some aspects of your life start with a low score and rise over time: the number of years you have had credit. Some only have short term and transient impacts: what is ...


8

There is no catch. You've been a good customer and your bank wants to reward you for it. One of the ways you build credit is by having more credit available. So by increasing your credit limit, its lowering your credit utilization rate (one of the factors that go into your credit score) - which is a good thing. So your bank trusts you with more credit, which ...


7

Your score is real-time, updating every time new data hits the reporting agencies. Dilip is correct, go over 20%, and it will hit the report, but then the score returns to normal after the next bill shows a sub-20% utilization. Say your average spending is $1000, but your limit is $5000. There's no harm in asking for a small increase in the limit, or ...


7

Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes you can pay off the balance more than once even if its not due. This will get applied to outstanding and you will be able to spend again. If so, is there a reason not to do this? There is no harm. However note that ...


7

Before the Credit Card Act of 2009, it used to be common practice to allow consumers to go over their credit limit. This allowed banks to: Collect more interest on higher balances Charge fees for going over the limit Typically, the over limit fee became active when your statement balance exceeded the credit limit after the statement cycle closes. If your ...


7

The fact they offered you a better card is no guarantee you will be accepted for it but it's certainly worth a shot. One credit application will have no discernible effect on your credit score so that's a non-issue and the additional limit will let you use your card much more effectively. By paying off purchases a few days after making them you're not ...


6

I believe it's just to limit the less well-off from acquiring one. If your credit history and income do not support a $15,000 credit limit, then don't even think about applying for an Altitude Black card. If they do, then don't bother with a student card. It's primarily about market segmentation by wealth or income.


6

Yes, they will probably do an hard pull (inquiry). This will hurt your score a bit. In about 12 months that effect will be mostly reduced and after 2 years it will be totally gone. How much of an effect this will have depends on what your credit score is now, how many other inquiries you've had recently and have in the near future, etc. If they approve the ...


6

As many comments implied, each bank probably has its own rules on what conditions create an offer of higher credit or automatic increase. My anecdotal evidence over the years confirms that a track record of charging right to a card's limit and then paying in full, resulted in the increased line. The card issuer is able to do a "soft pull" on the credit ...


6

There is another drawback, and this is why I keep a low-limit card for online purchases and another for carrying in risky/unfamiliar situations (e.g. travelling) a small limit acts as as damage limitation in the event of theft. In theory you may not be liable if your card is stolen and used. In practice you may be out of pocket for a considerable amount of ...


6

In addition to the existing answer, consider - If, and only if, you have a reason to want to game the score, i.e. maintain the higher level FICO, while still using the cards often, use this strategy. Until recently, I'd have told you that the utilization and balance come from the statement balance, you can pay in full, never pay a dime interest, and still ...


5

My experience in getting an automatic increase is before the 2007-2008 crisis. I never asked for an increase, but over a 15+ year period all my credit cards increased their credit limits. Some by sending me a letter, some by telling me with a one line comment on a monthly statement "Congratulations..." During the crisis one card reduced my limit, I suspect ...


5

No, it will have no negative impact on getting a mortgage. You are building up a history with regular payments and are not carrying a balance on the card each month. Your ability to get a mortgage will ultimately be based on other things. Money Saving Expert has a good guide on what will affect your credit score. A further discussion on the topic that ...


4

The credit card system is old and highly distributed. Not all card terminals are on-line. Not all card terminals are even electronic. So it is virtually impossible for them to precisely enforce a limit. In some countries there exist debit cards that only allow electronic processing with on-line validation (in the UK these are known as "solo" and "electron" ...


4

From my experience, banks report your credit usage only once a month, and they report the total on your bill. Whatever else you do during the month does not matter. I checked this by looking (monthly) at the full credit reports from all three big companies, for several years; each month shows exactly the total from the bill of that month. As a consequence, ...


4

Will having a lower credit limit, which I will still never reach, negatively impact my ability to get a mortgage in future? This would increase your utilization, the percentage of your total available credit that you use at any one time. Because it decreases the divisor, your total available credit, while not changing the dividend, the amount of your ...


Only top voted, non community-wiki answers of a minimum length are eligible