How To to Increase Your Credit Card Limit

By: Michael Hehn

The following article includes pertinent information that may cause you to reconsider what you thought you understood. The most important thing is to study with an open mind and be willing to revise your understanding if necessary.

Many credit card holders aspire for a higher credit card limit. The obvious reason for this is that a higher credit card limit enables the purchase of otherwise unaffordable merchandise.

First and foremost, credit card holders need to remember that to get a higher credit card limit, they must abide by the terms and conditions of the credit card company or bank.

Below are 7 other ways to get a higher credit card limit.

The most important thing to do for getting a higher credit card limit is to prove your credit worthiness. This is the first thing that banks and companies look for when giving a higher credit limit.

Attract positive attention from the credit card company or bank by paying finance charges once in a while. Obviously, this is not advisable on a repeating basis and should only be used as a last resort to increase your chances of getting a higher credit limit.

Proving to credit card companies and banks that you are good "borrower" can be a convincing way to get a higher credit limit. But be careful because this strategy also means that you will be paying finance charges which can accumulate in a hurry.

And always remember, a higher credit card limit means greater purchasing power, but it also increases the risk of your having to pay greater interest charges and other processing and late fees.

Always spend within your credit card limit because doing so means that you are capable of controlling your expenses.

Use your credit cards regularly. Don't keep your cards for emergency use only. If you use your credit cards sparingly, banks and credit card companies will be unable to understand your spending and pay-back behavior. Under these circumstances, most banks and credit card companies will be reluctant to give you a higher credit card limit.

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Never make minimum payments. Instead, try to pay for the entire outstanding amount. This will usually give you a better chance of getting a higher credit card limit.

Avoid late payments as much as possible. Not only will your increase payment increase, but you may also have to pay an additional fine for not clearing bills on time. This will also dim your chances of getting a higher credit card limit.

The best and simplest strategy for getting a higher credit card limit is to use your credit card wisely. Always keep in mind that credit card companies keep a record of your transactions and payment patterns, so always pay on-time.

The bottom line is that your performance in the records of banks and credit card companies will determine whether you will get a higher credit card limit or not.

If you receive a credit card application that appears to offer a low monthly interest rate, don't make a decision until you turn it over and closely examine the Disclosure Box. In it you'll find a more important measure of credit terms - the Annual Percentage Rate, or APR. By federal law, the Disclosure Box will also tell you whether or not the card has what is called a grace period - a number of days, usually 25, until your purchase starts to accrue finance charges. If a card has a reasonable grace period and you pay off your balance at the end of each billing cycle, you won't have to pay finance charges. It isn't difficult to find credit cards that offer these grace periods, so if the Disclosure Box doesn't declare one then throw the application in the trash and look for a better offer.

If you don't have any credit history at all, a credit card company won't want to give you a very high credit limit, but that's probably best when you're just starting out. You don't want to be tempted to go into serious debt with your very first credit card.

Ideally you want to pay off your balance each month to avoid paying any finance charges, but when that isn't possible it's important to know the actual cost of the items you purchase. The annual percentage rate, divided by 12 months, gives you the periodic rate that will be applied to your outstanding balance each month. You can estimate what your monthly finance charge will be by multiplying the periodic rate times the outstanding balance. It may sound complicated at first, but taking the time to learn this simple equation can make a big difference in how you use your credit card.

When you're able to see how much you actually spend on an item that you don't pay off at the end of the month, it might help you to resist the temptation to over-use your card. An item that you want to buy might be on sale at the time you purchase it, but if you don't pay off your balance at the end of the month then those finance charges can dramatically increase the actual amount you'll end up paying.

Credit cards are only one of the tools available to help you build a positive credit history. Making on-time payments for other forms of credit, such as rent and utilities, are also important. Depending on your situation, within 1-2 years your credit rating will be improved enough that you no longer need to use your card for new purchases to maintain your good credit. Use these tools wisely, and they'll help build your financial future!

This article's coverage of the information is as complete as it can be today. But you should always leave open the possibility that future research could uncover new facts.

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