A limit of $300-$500 is generally considered a low credit card limit for most major credit cards such as Visa and MasterCard. Retail store cards usually have credit limits as low as $100.
Why is my credit limit so low?
According to an article published by Experian, your credit limit is not only based on your credit score, but also based on your credit history. If you are relatively new to credit and have never had any credit before, it’s normal to receive a low credit limit.
The reason why most credit card companies will give you a credit limit when you are just starting out, is because you don’t have the necessary credit history to establish how credit worthy you are. Also, your credit score might be very low if you’ve never established your credit before. If you aren’t sure how your credit stacks up, read our article on where to get your free credit report and how to decipher it.
What can I do to increase my credit limit?
Wait it out, your credit limit is based on your history and your credit score. This means that as the time passes, your credit will start to increase, and you’ll start to get credit history on your new card. Don’t miss any payments on your low limit credit card and keep your credit utilization on this card low.
When a credit card company sees that you aren’t using your card, and have the full amount available, this usually triggers them to increase your credit in order to entice you to spend and go into debt, paying those high interest rates each month.
How do I get a credit limit increase?
Most credit limit increases are given automatically by your credit card companies. You may also call your credit card company and ask over the phone. There’s a certain algorithm that the creditors system use to determine whether or not you are eligible. Credit history and credit score play a big role on the decision of whether or not to give you a credit increase.
Also, if your income has increased since you opened the credit card account, this might work to your advantage, as income also plays a role into whether you get approved or not.
Another way to obtain a credit increase is by calling your credit card company and asking them. It’s shown that 85% of the time, most credit card companies approve credit limit increases. Most credit card companies have an FAQ section that tells you how to best request a credit increase with them.
If not by phone, usually the next option is to request one via their account portal. In the case their account portal does not have a way to request for a credit limit increase, then you will need to wait until you are automatically given one.
If you’ve been keeping track of your payments and have never fallen behind, you might also get an offer for a totally new credit card from your company, instead of a credit limit increase. Regularly check your emails as some offers will come to you via email for “pre-approved” credit cards from your credit card companies. Usually these pre-approved credit cards will have a higher credit limit than the card you currently have.
Should I request a credit limit increase?
It depends! If it’s been 8 to 12 months since you first activated the card, and have not received an automatic credit limit increase from your credit card company, then by all means request one. However if you’ve missed a payment here and there, your chances of getting the credit limit increase approved is slim.
Creditors want to see that you’ve been making payments on time. This ties in to your credit history. Also keep in mind that when requesting a credit limit increase, the credit card company usually does another “hard pull” on your credit report, which might cause your credit score to go down a few points. So don’t try to get a credit card while trying to apply for a car loan or a no money down house loan using one of the government backed financing stated in our article.
One thing you should note is that if you get denied, make sure you request in writing the exact reason why you were denied, and a copy of your credit report.
Should I apply for a new credit card in order to increase my credit limit?
We strongly advise against doing this as you might not have the outcome result you were expecting. As stated earlier, if you were denied for a new credit card, your credit score will drop because of the hard inquiry. Also, if you initially applied and were given a low credit limit, and a great deal of time has not passed from the time you received your low credit limit card, you might only be able to get a new credit card with the same credit limit amount.
This being said, if you have a pretty good grasp on your credit, and know that your credit score has increased since you last applied and have a consistent history of making payments on time, then applying for a new credit card might be the best way of getting a credit card with a higher credit limit.
If your credit card account portal has a place where you can check for Offers, check back regularly as you might be offered a new credit card with a higher credit limit instead of an automatic credit increase.
Credit card with high credit limit
If you’re going to apply for a new credit card with the purpose of obtaining a higher credit limit, we recommend checking out these credit cards that we’ve handpicked due to their high credit limit start. One word of caution, be ready for pay high annual fees.
|Capital One® Venture® Rewards Credit Card||Minimum credit limit: $5,000+|
Required Credit: Good
Annual fee: First Year: $0, thereafter: $95
|Chase Sapphire Reserve®||Minimum credit limit: $10,000+ |
Required Credit: Excellent
Annual fee: $450
Be very careful with a high limit credit card as it can be easy to let it spiral out of control and you can be left owing a lot of money and interest to these credit card companies.