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How to increase your credit card limit

If you’re finding that your credit limit is too low to cover your monthly credit card spending, here are some suggestions to increase the credit card limit.

This can give you more financial flexibility to use your credit card as you want and make bigger purchases. You can also use the featured rewards and benefits and even improve your credit score if you manage your spending and stay within your limit.

At the same time, extending your credit card limit could mean a higher risk of borrowing too much and going into debt so you’ll need to use it responsibly.

What is a credit limit?

A credit limit is the maximum amount you can borrow on your credit card at any given time. 

The lender works out what you can afford to repay by looking at various factors, including your:

  • Earnings
  • Debts
  • Current credit
  • Creditworthiness
  • Debt-to-income ratio

Apply online for an HSBC Premier Mastercard Credit Card and explore a wide range of benefits.

Tips to increase your credit limit

1. Always pay on time

Paying all your monthly bills before the due date, especially over the last 24-36 months, shows you're reliable and can manage your finances. Paying a credit card bill even a day late can impact your chances of a credit limit increase.

2. Request small increases

Many credit card issuers offer easy online options to increase a credit limit. Small hikes can often be approved easily, while larger increases need a fresh underwriting process.

Be careful not to ask for credit limit increases too frequently - this can affect your credit score.

3. Improve your credit score range

A credit score ranging between 720-750 can improve your credit card offerings. Responsible financial habits can help you improve your credit score.

Explore: Different types of credit cards

4. Update income increases

Submitting proof of a salary increase or extra funds can show a lender that you’re in a better position to repay any debts and have a lower risk.

What is a credit utilisation ratio?

Also known as a debt-to-credit ratio, this shows the percentage of your available credit that you're using through your monthly outstanding balance. Here is the formula:

Credit utilisation ratio = (Outstanding balance owed) ÷ (Total credit limit)

A credit utilisation ratio below 30% is best. If you borrow more, it may indicate you're having trouble managing your finances. 

Requesting a credit limit increase can help keep you below the 30% credit utilisation ratio but lower your credit score. Credit bureaus see this as a risk, especially if you use more available credit. But if you pay on time, your credit score will rise again.

Managing your credit limit

Here are some tips on how to handle more credit responsibly:

  • Maintain a credit utilisation ratio of below 30%
  • Set up automatic statement payments to avoid any finance charges
  • Transfer balances to interest-free cards if that’s an option
  • Avoid unnecessary cash withdrawals - these incur hefty charges

Things to consider

Before extending your credit limit, it’s worth thinking carefully about how you'll use it.

Have a major purchase or unplanned expense in mind? You could explore other options like a personal loan. Compare the interest charges and how much you'll repay.

If you ask for a credit card limit increase because you’re struggling to make ends meet, it could make your financial situation worse. More credit can mean more debt and more interest charges. It can also affect your credit score. You may also not be eligible for a credit limit increase.

How to increase your HSBC credit card limit

You can apply for an increase in credit limit with the 'Credit Limit Enhancement Form' available under the Application Forms section of our website. You'll need to submit the required documents. We may increase your credit limit following the necessary credit checks.

Download the form

Takeaway

Having more credit and purchasing power can give you the freedom to buy big-ticket items and not worry about impacting your daily credit card spending.

But it’s important to be responsible when using this extra credit. Spend within your credit limit and maintain your credit score. Try to use your credit limit wisely and remember that whatever you borrow, you have to pay back.

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You might also be interested in

Our step-by-step guide on how credit cards work and how to make the most out of them.
We outline some of the ways in which you can boost your score for better borrowing.
Explore what minimum payment on a credit card means, and why it’s important to pay this.

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