The wide world of credit cards can be a confusing place. One area consumers should receive clarification on is credit card limits. This is one area of travel credit cards that applies to other types of financial products, too, like personal loans.
What is a credit limit?
Your credit limit is the maximum amount of credit available for your credit card or a specific credit line – this can include personal loans at your financial institution of choice. Some situations may allow you to go over the limit – I’ve been there by accident – but these are rare.
Credit limits are based on myriad factors. The end goal for the financial institution is to make a profit from the credit card while minimizing your default risk. And, of course, for your benefit, the bank wants to give you a healthy amount to spend and spend frequently.
The typical time before you can increase your credit limit for at least 60 days though this can vary.
When shouldn’t or should you ask for a credit limit increase?
If you are going through financial difficulties, that is the wrong time to ask. Situations like losing your job or having a significant reduction in pay, your credit score decreasing, and you did not pay the institution on time. Or if you are cheating on your card company and applying for other cards.
If the following do not apply to you, then it might be a good time to apply for a limit increase.
Just ask already
If an automatic credit limit increase did not occur, don’t reject yourself! You might be eligible. Ask your travel credit card provider. You can call the company or even apply for an increase online.
The company will check to see if granting you a higher increase presents a risk to them. They want to make sure you can handle the debt and repay what you owe. Your chances for approval increase if you earn more or your life situation changes – like whether you have a mortgage, rent payments, or passive income.
Don’t ask for too much of an increase. Doubling your limit is probably out of the question. A 20% to 30% increase is a reasonable ask.
Get a car loan, get a higher credit limit
For ten years, my credit limit for my credit cards was at most $6,000.
Recently, I had to get another car after a random state employee decided to go to work high off who knows what without her driver’s license, go way above the 25-mile-per-hour speed limit, and hit my parked car ripped off the frame and suspension, punctured the driver side rear wheel (back left-hand side of the vehicle) and torn the muffler from its structure causing it not to be able to start and who knows what other havoc resulted in my poor car’s innards underneath.
My car insurance company declared the car a total loss after five weeks of back and forth with the insurance company and rental car company. It was a mess.
Near the end of this car story arc (before the total loss finding), I knew I would need another car. Therefore, I tried a couple options – well, two. The first was my local used car dealer, rated highly by people in my area. Then after that did not work, I decided to try CarMax. I applied for the cost of the car, $14,000, for the financing portion and started making payments. I decided to use for the Capital One Venture Card to go along with my Chase Sapphire Preferred card.
To my surprise, I was approved for a $20,000 credit limit. The only difference compared to previous times was the car loan I had gotten. I hazard that showing lenders you can handle a higher amount of debt/credit for a large purchase.
It may be possible to break through your credit limit cap in this way.
Conclusion
Credit card limits are essential to your travel credit card usage and plans. There are alternate ways to increase your credit card, like getting approved for a different type of loan. Know your credit limits, and then you will know the possibilities of your travel plans.
