Need advice about credit limit increases
Hi, I got an offer from Capital One today to increase my credit limit on my card from $4000 to $6500. I was just going to accept it because I've always heard that you shouldn't refuse an increase. It looks good to be trusted with a higher credit limit and it will lower your overall utilization.
I'm wondering, is that true? And even if it is true, is it a good rule to live by? I want to get a bank credit card next year because Capital One leaked my SIN so I don't like them anymore. Also it's more convenient to have one with my bank. But I wasn't going to cancel my card with Capitol One when I get my bank credit card because it's the oldest credit I have. It would be worse for me to cancel it, I think.
Anyway, the point is that I don't want an increase on my Capital one card to impact my ability to get a bank credit card next year. And also I don't even know why I would want that kind of credit limit on a credit card. I'm terrified of maxing it out again and having to pay it off at 19% interest. 💀
Any advice on this would be great. Pls and thank you 🙏🏼
Take the increase. Increases which are offered don't come with a corresponding hard pull, which is the thing that dings your credit.
Many YNABers have credit card limits which match or exceed our entire annual incomes. How lenders view you is complicated, but a $2500 increase offered to you by the issuing bank is not going to make you look like a substantially bigger risk. It's not until you get into the range where you look like you could really charge way more than you could ever pay back that they get nervous, and even then, if you show no history of ever having done that, they mostly don't care.
If you're worried about maxing it out, get better YNAB habits. You should be paying the statement balance every month because you are spending within your budget and covering overspending before it happens.
Two other points:
1. Hackers target banks because that's where the information is. I wouldn't quit using a bank just because of one security breach unless it resulted in disaster for you and many other customers. You're going to be switching banks every couple years if you do that. Monitor your credit for unauthorized activity and maybe get an identity theft rider on your insurance; they're pretty cheap.
2. Bank credit cards don't usually offer you any rewards. There's no reason to have a card with your bank unless it's the only card you can have. By all means, if it makes you feel more comfortable to make your daily driver your bank credit card, there's nothing wrong with that, but it's not likely to be a card which benefits you in any other way.