How to Get an American Express Credit Limit Increase – Forbes Advisor
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Credit limits determine how much you can spend on a given credit card. Card issuers can increase your credit limit automatically, but in many cases you can request an increase directly from the issuer. High credit limits can help you make larger purchases and lower your overall credit utilization rate. The key is to keep the balance low from month to month and to make payments on time.
How to Increase Your American Express Credit Limit
Raising the credit limit on an American Express credit card is fairly simple if your account is in good standing. A good reputation means that the cardholder has a stable job or income, a timely payment history, and a good credit rating. Keep in mind that your credit account must have been open for at least 60 days before requesting a limit increase.
To request an increase, log in to your online account and select “Increase Line of Credit”. Follow the prompts to make the request. Cardholders can also call the number on the back of the card to speak to a representative and make a request over the phone.
Remember to keep the increase request reasonable, such as 10% to 25% more than your current limit. If your limit is $1,000, asking for an increase to $10,000 may be too much and result in a denial.
Do credit limit increases happen automatically?
Yes, some card issuers, including American Express, may automatically increase a cardholder’s credit limit.
An automatic increase can occur as often as every six months if cardholders:
- Use the card frequently
- Make regular payments on time
- Keep a low balance
- Report a recent increase in income
- Maintain a good credit rating.
Card issuers use a variety of information to determine if cardholders are eligible for an automatic increase. This data may include gross annual income, total monthly bill payments, and employment status. Keep this information up to date on your account while waiting for a raise to speed up approval and improve your chances.
Advantages and disadvantages of higher credit limits
Benefits of higher credit limits
Obtaining a higher credit limit is often a sign that you are in good standing with the credit card issuer. You may automatically receive a higher limit when you earn more income than the previous year, maintain a history of on-time payments, or maintain a good credit rating.
Here are some benefits of having a higher credit limit:
- Lower credit utilization rates. A higher credit limit can reduce credit utilization rates by increasing the total credit limit available to cardholders as long as they maintain the same spending habits.
- Increase in credit score. Lower credit utilization, on-time payments, and good spending habits can all contribute to an increase in credit score.
- More credit available for large purchases. A higher credit limit means there’s more wiggle room for big purchases like a brand new TV or appliance. Be sure to pay off the balance as quickly as possible to avoid spending high interest.
- Improve your position for a new car loan or mortgage. The combination of a better credit score with a history of on-time payments and low credit utilization will put anyone in a good position to get lower interest rates on big loans.
Disadvantages of higher credit limits
There are a few risks to having a higher credit limit, especially if the consequences of higher spending aren’t carefully considered.
- More credit available can lead to more spending. While having more credit can be a good thing, everyone should aim to not spend more than they can afford. Don’t spend more than can be refunded at the end of the billing cycle.
- Greater risk of indebtedness. Taking advantage of a higher credit limit to spend more can send you into a spiral of debt with unpaid balances and high interest rates.
- Difficult credit inquiries. Sometimes card issuers will make a firm credit inquiry to increase a credit limit, particularly if the increase is requested and not automatically granted to the cardholder. Too many difficult requests in a short period of time can negatively affect credit scores (compared to an informal request which has no effect).
What to do if your credit limit increase is declined
Credit limit increase request denied? American Express may refuse such a request for several reasons.
If you have requested a raise within the past six months, American Express may deny a second request. Try again after some time. Other reasons for declines can be a consistently high card balance, frequent late payments, or a low credit score.
Don’t worry if the request is denied. Ask American Express representatives if they can provide a reason, then work on improving the appearance of your perceived weak spot over the next six months. Pay off any balances, pay your bills on time, and report revenue increases to American Express when they occur.
Another option is to apply for a new credit card from American Express or another card issuer. Opening a new line of credit will have the same effect as increasing the credit limit on a card, but also carries the same additional risks. If cardholders are struggling to manage their spending, opening a new credit card could lead to additional debt. A new application will also lead to a serious credit investigation, which could lower a credit score by a few points.
Requesting a credit limit increase is fairly simple, but remember to be realistic when asking the card issuer for an increase. Simply waiting for a raise is a good option as many card issuers will reward responsible cardholders with automatic raises. Increasing limits could result in higher credit scores and more spending abilities. Be sure to maintain responsible spending habits and continue to make on-time payments to boost your credit score.
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