Should I have a higher credit limit on my credit card?
"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." "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: 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." 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. 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. "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." "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."
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 again is a good thing. You can also request a line of credit increase yourself without waiting for the bank to do so - but there's a 6 month wait between each increase, assuming you get one. I always ask every 6 months and have gotten approved each time, and it's helped my credit score tremendously. Another reason is that the amount of unused credit you have is a positive factor on your credit score.  It's generally easier to open several different accounts for $X dollars each with different banks than to get your current bank to raise your limit severalfold in a single go.  Your current bank has to worry about why you suddenly are asking for a large additional amount of credit; while other banks will be willing to offer you smaller amounts of credit in the hope that you transfer your business from your current bank to them. "The comments section to Dilip's reply is overflowing.  First - the OP (Graphth) is correct in that credit scoring has become a game. A series of data points that predicts default probability, but of course, offers little chance to explain why you applied for 3 loans (all refinancing to save money on home or rentals) got new credit cards (to get better rewards) and have your average time with accounts drop like a rock (well, I canceled the old cards).  The data doesn't dig that deep.  To discuss the ""Spend More With Plastic?"" phenomenon - I have no skin in the game, I don't sell credit card services. So if the answer is yes, you spend more with cards, I'll accept that. Here's my issue - The studies are all contrived. Give college students $10 cash and $10 gift cards and send them into the cafeteria. Cute, but it produces no meaningful data. I can tell you that when I give my 13yr old $20 cash, it gets spent very wisely. A $20 Starbucks card, and she's treating friends and family to lattes. No study needed, the result is immediate and obvious. Any study worth looking at would first separate the population into two groups, those who pay in full each month and those who carry a balance. Then these two groups would need to be subdivided to study their behavior if they went all cash. Not a simply survey, and not cheap to get a study of the number of people you need for meaningful data. I've read quotes where The David claimed that card users spend 10% more than cash users. While I accept that Graphth's concern is valid, that he may spend more with cards than cash, there is no study (that I can find) which correlates to a percentage result as all studies appear to be contrived with small amounts to spend.  As far as playing the game goes - I can charge gas, my cable bill, and a few other things whose dollar amounts can't change regardless. (Unless you're convinced I'll gas up and go joy-riding) Last - I'd love to see any link in the comments to a meaningful study. Quotes where conclusions are stated but no data or methodology don't add much to the discussion.  Edit - Do You Spend More with Cash or Credit? is an article by a fellow Personal Finance Blogger. His conclusion is subjective of course, but along the same path that I'm on with this analysis." Your plan will work to increase your total credit capacity (good for your credit score) and reduce your utilization (also good).  As mentioned, you will need to be careful to use these cards periodically or they will get closed, but it will work. The question is whether this will help you or not.  In addition to credit capacity and utilization, your credit score looks at things like These factors may hurt you as you continue to open accounts.  You can easily get to the stage where your score is not benefitting much from increased capacity and it is getting hurt a lot by pulls and low average age. BTW you are correct that closing accounts generally hurts your score.  It probably reduces average age, may reduce maximum age, reduces your capacity, and increases your utilization. "I don't know of a guideline to how often you can ask for an increase. You can ask as often as you like. As for consequences, refer to Is there a downside to asking for a credit increase?, where the consensus is that, aside from a possible (temporary) hard pull on your credit report, there's probably no risk to asking. Depending on your credit score/history, and especially in the current economy, you may get ""no"" as an answer most often. You can try talking to your card's Credit Department or even Customer Retention Department as they may have more leverage. They may say yes or no or that they need to review your account. When you do ask for an increase, I would make sure to ask if there will be a hard pull on your report, if there is any cost or downside to applying, and to make sure that this would be an increase to your current credit line, not a new account." The card you have is one where you had to deposit an amount equivelent to your card limit -a secured limit credit card.  Capital One is one if the primary cards of this type. The typical rules of credit card usage and building your credit, do not apply.  So, yes, you want to use the card as much as possible and pay off your balance as often as is necessary to keep your limit freed up. You can actually pay the full balance plus 10%, and gain a little extra limit. Use your card as much as possible and call them and ask for a limit increase every three months.  usually about 4 - 5 months in, they will increase your limit and do so without asking for a corresponding security deposit.  This is really cool, because it means you are becoming credit-worthy. I know so much about this because I applied for this card for my son and am helping him in his attempt to repair his credit.  His score increased by almost 200 points last year. 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 in full, nothing happens. Absolutely. It's the way credit is calculated. The most important things here are credit utilization (how much of your open credit you're using, the less the better for your score) and and length of open credit. The longer you've had a credit card, the more it helps your score. If you use your card and pay it off before the bill comes, the credit card company still knows you're using the card and won't close it. I recommend you download credit karma so you can track your score and learn more about how credit is calculated. I think you got the message mixed up a little: Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month.   What's typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements. (That doesn't mean paying off your balances each month isn't financially smart -- it is -- just that the credit scores don't care.)   You typically can increase your scores by limiting your charges to 30% or less of a card's limit. -- from 7 Ways to Fix Your Credit Score In other words, ALWAYS pay off your balance if you can. But don't fill up your card to the max of your credit limit each month. i.e. if your credit limit is $5000, only spend $2000 each month. "For a newly registered business, you'll be using your ""personal"" credit score to get the credit.  You will need to sign for the credit card personally so that if your business goes under, they still get paid. Your idea of opening a business card to increase your credit score is not a sound one. Business plastic might not show up on   your personal credit history. While   some issuers report business accounts   on a consumer's personal credit   history, others don't. This cuts both ways. Some   entrepreneurs want business cards on   their personal reports, believing   those nice high limits and good   payment histories will boost their   scores. Other small business owners,   especially those who keep high running   balances, know that including that   credit line could potentially lower   their personal credit scores even if   they pay off the cards in full every   month. There is one instance in which the   card will show up on your personal   credit history: if you go into   default. You're not entitled to a   positive mark, ""but if you get a   negative mark, it will go on your   personal report,"" Frank says. And some further information related to evaluating a business for a credit card: If an issuer is evaluating you for a   business card, the company should be   asking about your business, says   Frank. In addition, there ""should be   something on the application that   indicates it's for business use,"" he   says. Bottom line: If it's a business   card, expect that the issuer will want   at least some information pertaining   to your business. There is additional underwriting for   small business cards, says Alfonso. In   addition to personal salary and credit   scores, business owners ""can share   financials with us, and we evaluate   the entire business financial   background in order to give them   larger lines,"" she says. Anticipate that the issuer will check   your personal credit, too. ""The vast   majority of business cards are based   on a personal credit score,"" says   Frank. In addition, many issuers ask   entrepreneurs to personally guarantee   the accounts. That means even if the   businesses go bust, the owners promise   to repay the debts. Source" "I live in Canada and have a BMO mastercard. I called them and asked them and their answer was ""of course!"". I have put thousands of dollars on my mastercard from my bank account to pay for rare, large purchases. The money I put on appears differently on my online mastercard account though.  EX:  account balance: $6,000.00 CR  available credit: $3,000.00  This confused me at first, but when I called and asked them, they said my available credit doesn't  change (ie: how much BMO lends me), but when I add my available credit + what I've put on my card (my account balance, which is CR (meaning my balance has a surplus of money)), then my spending limit is $9,000.00 So, I don't increase my ""credit"" limit, but I do increase my spending limit. It just comes down to terminology. I assume it is like this for other credit cards, but I would recommend calling and asking, just to be on the safe side. Heath" "https://money.stackexchange.com/a/79252/41349 https://money.stackexchange.com/a/79261/41349  Adding to @Chris H answer about damage limitation Online purchases could include phone/tablet app purchases, which could be an issue if you have children or you are a victim of fraud. First link from googling ""Kid racks up almost $6,000 on Jurassic World in-app purchases"" Adding to @Michael C. Answer I think credit cards perhaps can make it more difficult to budget, if you are more lazy/have limited savings.  These might happen more long term if you don't keep track of your spending. I.e. If your credit limit matches your monthly income, and if you pay off your card each month, I think it is harder to overspend as you don't have more credit available than you can afford to spend. However this is countered by that, a slightly higher credit limit may help to avoid fees from exceeding your credit card limit. I think due to that some/not all purchases are instantly ""banked"", i.e. the shop might send all of its monies to its bank at the end of the day or something like this, so you can just keep spending not realising you have exceeding your credit limit and get hit by fees." "US based so I don't know how closely this translates to the UK, but generally speaking there are three things that contribute to a strong credit score. Length/volume of credit history. This is a combination of how many accounts appear in your history along with how long they have been open.  Having a series of accounts that were maintained in good standing looks better than only having one.  Maintaining an account in good standing for a prolonged period (3+ years) is better than a bunch of short term items.  ""Ideally"" your credit history should contain a mix of term loans that were paid per contract and a few (1?) revolving account that shows ongoing use.  The goal is to show that you can handle ongoing obligations responsibly, and manage multiple things at the same time. Utilization. Or how much you currently owe vs how much people have agreed to lend you.  Being close to your limits raises questions about whether or not you can really handle the additional debt.  Having large availability raises questions about whether you would be able to handle it if you suddenly maxed things out.  Finding the correct middle point can be challenging, the numbers I have seen thrown around most by the ""experts"" is 20-30% utilization. Recent Activity. Or how much new debt have you taken on?  If someone is opening lots of new accounts it raises red flags.  Shopping around for a deal on a auto loan or mortgage before settling on one is fine.  Opening 5 new credit lines in the past 6 months, probably going to knock you down a bit.  One of the concerns here is have you had the accounts long enough to demonstrate that you will be able to handle them in the long term. One route that was suggested to me in my early years was to go take out a 6mo loan from a bank, and just place the money in a CD while I made the payments.  Then repeat with a longer term.  Worst case, you can cash out the CD to pay off the loan in an emergency, but otherwise it helps show the type of history they are looking for. All that said, I have to agree with Pete B's answer.  Don't play the credit game if you don't really need to.  Or play it just enough to stay in the game and plan your finances to avoid relying on it.  (Advice I wish I had taken long ago.)" Ripped off may be too strong as it implies intent - I'm hopeful it's just bad logic or terminology.   I would say better agreements would be: Borrowing money from family/friends is always risky.  If you and your parents are comfortable with the situation and can reliably keep records of how much is owed at any given time (and how much of the $500/mo is interest) then the loan might be a good option.  If not, and your parents don't need the income stream from the loan, then I would recommend the second option since it's much cleaner. In any case, make sure everything is in writing and the proper legal procedures are followed (just as if you had borrowed the money from a bank). That means either filing a mortgage with the county for option 1 or having both parties on the deed, and having the ownership percentages in writing. &gt;At 15K per year for the 40+ years of work from 22 or so to 65, it will be 600K.   Hah. You can't take nominal terms like that. Even if you take just inflation at say, 2% a year, and a modest required rate of return of 8%, the present value of 15K a year for 40 years is 146,685. So basically if you expect to get only 15K a year more for the next 40 years, you can only afford to pay 146,685 dollars for tuition + forgone income today. That's just to break you even. And many people invest much more than that.