There are several reasons why I would advise you to increase your credit card limit.
There may be a time when you need to pay for a big purchase and in a timely manner. Having a high credit limit can facilitate this need. The higher the limit, the greater resource your credit card can be.
The balance on any credit card should not exceed 30% of the credit availability. This is a critical tip for your first credit card, your second, third...all of them! So, if you're credit card limit is $10,000, your balance should be kept below $3,000.
Having a balance that exceeds this percentage typically brings down your credit score. This can mean higher interest rates. Increase your credit availability so you don't fall into this scenario.
You may be presented with an investment opportunity and you need cash quick. A lot of credit cards have the cash advance feature. You can cash checks against your credit card and pay them later.
These checks can also act as an emergency resource. If you have a high limit on cash advances, then you have a great resource for cash.
If you have a high debt to income ratio, increasing your limit may decrease your ratio. A lower ratio can mean better interest rates.
So now the question is, "How do I increase my credit availability?" Easy. Pick up the phone.
Step 1. Call the credit card company.
Hi, my name is [your name] and I have some questions about my credit card.
Step 2. Credit availability.
Ask what your credit card limit is.
Can you tell me what my credit card limit is on this card?
Once they tell you, record the number. Then say...
Wow, that's low.
OK. I plan on making some big purchases in the near future. But in order to do that, I'm going to need a significant increase in my credit availability. Can I request the maximum increase without having a credit inquiry?
If they say yes, that's great because this won't affect your credit. Always try to get the maximum increase. You may be able to counteroffer the number they provide.
But, they may not offer the maximum increase and request a specific figure. Now it's a guessing game between you and the credit card company. When we first tried this, we were able to get at least three times the credit card limit that we had. But don't go too overboard because you may just be rejected.
Step 3. Interest rate.
Ask what your interest rate is.
Can you tell me what my interest rate is?
Once they answer, record the number. At this point you quickly say...
Wow, that's really high.
I want to make you my PRIMARY credit card, but I can't do that with such a high interest rate. What's the lowest rate you can give me?
Step 4. Cash advances.
Repeat steps 2 and 3 in order to increase the limit on cash advances and decrease the interest rate as well. Remember, cash advances are as good as cash.
So, if you're not satisfied with the outcome...
May I speak with your manager?
Managers have more pull. Again, tell them your desire to use them as your primary card and you plan on making big purchases on it in the near future.
Please remain calm and polite. Be courteous. Otherwise, they'll just reject you. This experience should not be unpleasant.
If you're still not satisfied with your results after speaking to a manger...
Step 6. Ask for the Retention Department.
Can you transfer me to your Retention Department?The Retention Department is the place where people go when they want to close their cards. Now, it is not your intention to close your account.
The strategy here is that the individuals in this department typically have more power than the managers on the call floor. (I know. I used to work in a call center.) They want to do everything in their power to keep you as a customer. Now you have leverage.
This usually is the end of the line. So, make another attempt to better your figures and then take whatever they give you.
Once you are done with the first card, go to the next. Repeat the process. Remember to write down the beginning and ending figures. Compare them and see how you did. You can call the credit card company back in six months to repeat the process.
Do you have brilliant ways to save money? Share your strategy here!
Regardless of what the popular financial pundits may say, credit cards are great tools if you understand the proper use of credit cards. Now you have more buying power with higher credit availability. The lower interest rate is one of our strategies to save money.
Don't use this to fall into consumer debt. Use this for emergencies, increasing your fico score, and productivity.
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