Should You Raise Your Credit Limit?
Welcome to our Hoyes Michalos Debt Free Digest where we round up personal finance topics from around the web to help you live, and remain, debt free.
With the pandemic driving up the cost of virtually everything, you may be thinking about increasing your credit limit to have more room for purchases like your holiday shopping or household necessities. While a higher credit limit can be helpful, it also comes with serious risks. Our posts this month will help you understand how to approach credit limit increases safely.
What is Your Credit Limit?
Start by understanding what your credit limit actually means and how it works.
In this short video, our own Diane Cunha explains how to find out your available credit limit, how credit overage charges work, and the benefits of keeping a low credit balance throughout the month.
Good Reads From Around the Web
Pros and Cons of a Pre-Approved Credit Limit Increase
Your bank has just approved you for more credit. Should you accept? When would it be a good idea to think twice about getting a higher limit on your credit card or line of credit?
In this post, Doug Hoyes outlines when accepting a pre-approved credit limit increase makes sense, when to say no to your lender, and whether you should accept more credit to improve your credit score.
When Should You Ask for a Credit Limit Increase?
We believe it’s important to increase your credit limit slowly. Asking for a higher limit is asking for more credit, which may mean a hit on your credit report.
That being said, a good time to ask for a credit limit increase is if you have been able to consistently repay your credit balances in full over a long period and you now need access to more credit for major purchases. We suggest only asking for as much credit as you can still comfortably repay in full if you were to ever hit your maximum limit. Otherwise, you risk getting into debt problems.
You should also avoid asking for more credit when you’ve recently requested increases elsewhere. Too many credit requests can appear as a sign of financial distress to lenders, which can negatively impact your credit report.
$50 Shoppers Drug Mart Gift Card Giveaway
Enter for your chance to WIN 1 of 10 free $50 Shoppers Drug Mart gift cards!
This month, you could save on household toiletries and other needs by entering in our $50 Shoppers Drug Mart gift card giveaway.
Enter soon. Giveaway ends December 30, 2021 at 11:59 p.m.
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