Should You Increase Your Credit Card Limits?
Among many who have one or more credit cards, the general idea is that a credit limit increase is a good thing. Technically, this isn’t wrong. Receiving a credit limit increase shows that your credit providers trust in your ability to handle debt. If you make your monthly payments on time and reduce your debt limit to healthy amounts, creditors are sure to take notice.
The main issue with increasing a line of credit is the overwhelming urge to use the extra money provided. If it doesn’t fit into your budget, a credit increase can result in overextending your limited resources, causing you to fall into more debt. Oftentimes, credit increases are applied without the cardholder’s knowledge, which can lead to increased balances and a false sense of security.
However, if given the opportunity to manually increase your credit limit, should you?
If you’re beginning to get a good handle on your debts then it might be worth it to increase the amount of available credit you have. This number impacts your credit in as direct a manner as possible. Simply put, the more credit you have available to use, the higher your credit score will be. This also means you must possess more available credit than debt. If this is your situation, increasing your credit line would only benefit you overall.
On the other hand, if your debt is overwhelming you, increasing your credit limit might not be the best thing to do. In essence, you’d only end up with more debt in the end. If you’re not good with handling your debt, this might only be incentive to dig yourself a deeper hole. This wouldn’t be helpful in any capacity.
How can you avoid an increased credit limit?
The simplest manner of avoidance is to alert your credit card providers that you do not want a credit card increase. A phone call or letter would suffice. Just asking to keep your credit limit as it is can be enough to spare yourself a potential financial downfall.