Skip to main content Skip to chat

Pros and cons of increasing your credit limit

September 26, 2019

Written by Barry Choi

Key takeaways

  • Perhaps your life situation has changed, or you’re planning to make some big purchases.
  • If you're responsible with your spending, then accepting or asking for a credit limit increase could be a good idea.
  • But if you're worried about your spending and don't have an immediate need for the extra credit, it may be smart to leave your limit where it is for now.

Pros and cons of increasing your credit limit

Whether it's through an offer made by your financial institution or you've been thinking about applying for a credit limit increase on your credit card, here are some things to consider.

Pros of getting a credit limit increase

Generally speaking, there are three main reasons why someone would want to increase the credit limit on their credit card:

Your life situation has changed: many people start with a reasonable credit limit, often between $1,000-5,000. Depending on your life situation, it may originally have been a good amount, but sometimes you may need more spending power.

You're planning on making more purchases: for example, if you're planning a big trip due to a special occasion like a honeymoon or anniversary, you may need to charge all your expenses to your credit card, which could be more than your current limit. You may also have a large purchase coming up, such as a laptop or tuition, where having the ability to pay with your card could help you manage the expense.

Avoid overlimit fees: a credit limit increase could come in handy if you carry a balance and tend to exceed your limit often. Check to see if your credit card charges overlimit fees.

Cons of getting a credit limit increase

As you can imagine, there are also a few scenarios where it's in your best interest to decline or not ask for a credit limit increase on your credit card:

You're worried about your spending: having an increased credit limit means you can charge more purchases to your card. If you've had spending issues in the past or you're worried you'll go into debt, then you're probably better off keeping your limit where it is.

You don't need it: having access to additional credit can be convenient, but if you don't need it, why get it? Many people have multiple credit cards and access to a line of credit, so perhaps you already have enough credit for your needs.

If there are additional cardholders: any authorized users—meaning additional cardholders—can use the limit and not just you. So there's always that risk that comes with an increased limit.

How a credit limit increase affects your credit score

Accepting a credit limit increase may affect your credit score depending on the circumstances.

Increases in your credit limit could affect your credit score with more credit you can use and impact your debt-to-equity ratio (debt-to-equity ratio is one of the factors used by lenders to determine your availability for new credit).

Should you increase your credit limit?

If you're responsible with your spending, then accepting or asking for a credit limit increase on your credit card could be a good idea. But if you're worried about your spending and don't have an immediate need for the extra credit, it may be smart to leave your limit where it is for now.


This article or video (the “Content”), as applicable, is provided for information purposes only. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this content, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and Tangerine Bank is not responsible to update this information. References to any third party product or service, opinion or statement, or the use of any trade, firm or corporation name does not constitute endorsement, recommendation, or approval by Tangerine Bank of any of the products, services or opinions of the third party. All third party sources are believed to be accurate and reliable as of the date of publication and Tangerine Bank does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

Tangerine Investment Funds are managed by Tangerine Investment Management Inc. and are only available by opening an Investment Fund Account with Tangerine Investment Funds Limited. These firms are wholly owned subsidiaries of Tangerine Bank. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.