Credit Card Limit Increases: What are the Pros and Cons?

On the surface, credit card increases may seem more rewarding and have its benefits, but could it end up hurting your credit? Listed below are the pros and cons of increasing your credit card limit.

Pros of a Credit Limit Increase

  1. More spending – Increasing your credit limit gives you more flexibility and more power to make high dollar purchases.
  2. Rewards System – Your institution may have a reward program that gives you more points for making everyday purchases, large or small. With more buying power, you can confidently use your high limit card for all your purchases and reap the rewards of a rewards system.
  3. Increased Credit Score – A higher limit can provide you with a lower credit utilization being reported to the credit bureaus, which can result in a boost in your credit score.

Cons of a Credit Limit Increase

  1. More debt – While the increase can be helpful, having a higher limit might have you end up in more debt. If not used responsibly, the temptation to spend more of a larger credit limit could result in unwanted debt.
  2. Hard pull – Whenever you apply for a new loan or credit card, companies will pull your credit resulting in a “hard pull” being reported to your credit, this included credit line increases. The hard pull may lower your credit score whereas a soft pull can leave your credit score unaffected.

When deciding to agree to a credit card limit increase, it is important to balance the pros and cons before making any final decision and to focus on what type of card user you are and what you can handle. For additional guidance in deciding which credit card is best for you, check out our Credit Card article.