Is a credit limit increase a good thing?
Whether it’s a good thing or a bad thing ultimately depends on your level of self-control and also what your current financial situation is. Debt charity StepChange, carried out a survey and found 54% of those they asked, had seen their credit limit increased without requesting it. Of those asked, 49% had said it had made their existing debt problems worse.
Clearly, if money’s already a little tight then being given even more to spend is never going to be a good thing; let’s not forget, it’s not free money – if you do spend on your credit card you have to pay it back and often with interest if you don’t pay it back on your next statement . And sometimes, having all that temptation is simply irresistible.
Of course, having an increased limit can help with those little extras and if you manage your credit card with military precision then you might welcome the extra credit.
In terms of your credit score, increasing your credit limit might be a good thing though. In a perfect world you should only use about 25% to 30% of your available credit. So a slight increase might balance out your existing spend vs credit availability level; making you a better long term risk.