Increased Credit Limits - Not Always Positive

Most credit card holders have received a congratulatory letter notifying them their credit limit has been increased. While a higher credit limit might sound good, there are some things to think about to determine whether it’s the right idea for you. You can call the card company and ask them NOT to raise the limit if you choose.  Impact on Credit Score: A higher credit limit can improve your credit score over time, but only if you keep roughly the same balance. Credit scores consider your debt-to-credit ratio, so charging more when your credit limit goes up can make your credit score go down.  Rewards Potential: If you stay on top of your credit card bills, having a higher credit limit can earn you bigger and better rewards—like cash back or airline tickets.  Alternative Sources of Credit: Having a couple of credit cards gives lenders a fuller picture of your ability to repay loans. If you already have multiple cards, a credit limit increase might be the best option. If you only have one card, maybe open a second credit card account instead.