What a Credit Increase Can Do For You
February 10, 2021 | White Rose Credit Union | Financial Wellness
If you are a responsible credit card holder, with decent credit and pay your amount due on time every month, you could be eligible for a credit limit increase. Increasing your credit limit gives you an extra financial cushion, improves your credit utilization ratio, and gives you more room to transfer your balances when using a lower-interest card.
Increasing Your Financial Cushion
Increasing your credit limit provides an added layer of protection against unexpected expenses. Having a savings account is ideal, however having the extra spending power with your credit card, offers an extra piece of mind, knowing that you’ll have a plan for whatever life throws at you.
Credit Utilization Ratio
Your credit utilization ratio factors into your credit score. Typically, you want to keep your credit card balances below 30% of your credit limit. Increasing your credit limit and keeping your balance the same, or lower will improve your credit utilization ratio, which could help improve your overall credit score.
Preparing for a Balance Transfer
Requesting a credit limit increase also allows you more flexibility if you have other balances on high-interest cards that you’d like to consolidate. If you are already a credit card holder and know you want to take advantage of a Visa Balance Transfer, but may need a higher limit, request an increase before taking advantage of the transfer.
Look for special promotions on Visa Balance Transfers that give you no or low Annual Percentage Rates and introductory periods to pay down your debt faster and cheaper.