Should I get a new credit card or increase my credit limit?
If you’re looking for more financial flexibility and purchasing power, you might consider applying for a new credit card or asking for a higher credit limit on an existing card.
Both strategies could be helpful. But how you go about it and the way they affect your credit scores can differ.
What you’ll learn:
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A new credit card may offer new rewards opportunities and better terms.
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A credit limit increase could offer a spending boost without another account to manage.
- When deciding which option might be right for you, you can consider the impact to your credit scores and overall finances.
3 reasons to consider a new credit card
If you’re approved for a new card, it could offer benefits beyond just spending.
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Rewards: A new card could give you the opportunity to earn more rewards, including bonuses for new cardholders. For instance, if you’re planning a trip, you could earn rewards miles to help cover travel costs. Cash back rewards could also add up over time as you use the card.
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Interest rates: If your new card has a low introductory annual percentage rate (APR), it could help you avoid interest if you’re planning a large purchase or consolidating debt. Remember, though, that introductory rates are temporary.
- Credit utilization: If you get more credit but maintain the same spending habits, it can lower your credit utilization ratio. That’s the percentage of available credit you’re using across all your revolving credit accounts. Credit utilization is an important factor in the calculation of your credit scores. The Consumer Financial Protection Bureau (CFPB) recommends keeping your ratio below 30%.
3 reasons to consider a credit limit increase
Requesting a credit limit increase on an existing credit card is another way to access more credit. It also can affect more than just your purchasing power.
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Credit effects: If you don’t increase your spending, a higher credit limit can lower your credit utilization ratio the same way that getting a new credit card can. And it won’t lower the average age of your credit history, another credit-scoring factor.
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Credit inquiries: If your issuer doesn’t perform what’s called a “hard pull” to review your request for more credit, it won’t affect your credit scores the way a new application might.
- Account management: A credit limit increase on an existing card may be easier to manage than an additional credit card account.
3 considerations before getting a new card or increasing your credit limit
When you’re debating between getting a new card or increasing your credit limit, it could help to consider the following:
1. Neither is guaranteed
The first step to getting a new card or a credit limit increase is getting approved. For a new card, issuers may look at your credit reports, credit scores and income to determine whether to approve your application.
With a credit limit increase, your card issuer might review your credit history. It may also look at how long you’ve had the card, how you’ve used it, your income and more.
2. Credit-scoring factors
Both options have the potential to affect your credit utilization ratio.
If a hard credit inquiry is involved, you may see a slight drop in your credit scores. Too many hard inquiries in a short period of time may have a longer-lasting negative impact on your credit scores. Not all issuers conduct a hard inquiry for a credit limit increase, but some might. Capital One doesn’t require a hard inquiry for a credit limit increase.
A new credit card could also affect your credit age.
3. Overspending
A new card or a credit limit increase will typically give you more available credit, which could make it tempting to spend more. But doing so could make it harder to pay off your credit card debt. And carrying a balance could increase your credit utilization ratio and lead to higher interest costs.
New credit card vs. credit limit increase: Comparing your options
Here’s an overview of how getting a new credit card compares to increasing a card’s credit limit.
| New credit card | Credit limit increase | |
| Increases available credit | ✔ | ✔ |
| Requires a hard inquiry | ✔ | Depends on issuer |
| Maintains your average age of accounts | ✔ | |
| Offers opportunity for new rewards | ✔ | |
| Offers opportunity for new terms | ✔ |
Get a new card or increase credit limit FAQ
Check out these frequently asked questions about getting a new credit card versus requesting a credit limit increase.
How often should I apply for a new credit card?
When to apply for a credit card is a personal decision. But the CFPB recommends applying only for the credit you need.
Some card issuers have limits on how often you can open a new account. Here are a few examples.
- The 5/24 rule: For some issuers, applicants can’t open more than five new credit card accounts in 24 months.
- The 2/3/4 rule: According to this rule, applicants are limited to two new cards in 30 days, three new cards in 12 months and four new cards in 24 months.
- The six-month or one-year rule: Some credit card issuers may let borrowers open a new credit card account only once every six months or once a year.
When should I ask for a credit limit increase?
You might be able to ask your card issuer for a credit limit increase whenever you want. That doesn’t necessarily mean you’ll get approved.
In other cases, a creditor may come to you with an offer to raise your limit. To learn more about Capital One policies, check out these additional frequently asked questions about credit limit increases.
Is there a downside to increasing my credit limit?
With an increase in spending power, there may be a temptation to overspend. If that results in missing payments or carrying a credit card balance, it could hurt your credit. That’s why the CFPB recommends paying off your balance on time, in full whenever possible, and applying only for the credit you need.
Capital One doesn’t conduct a hard inquiry when processing a request to increase a credit limit, but some lenders do. If that’s the case, you may experience a temporary dip in your credit scores.
Key takeaways: New credit card vs. credit limit increase
Applying for a new credit card or requesting additional credit on an existing card are two ways you might increase your spending power. It can help to think about how your decision might affect your credit scores and overall finances.
If your need for additional funds is temporary or occasional, you may be able to check whether a purchase beyond your current credit limit could be approved.
If you decide a new card is the right move, Capital One has a rewards card to fit your lifestyle.
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See if you’re pre-approved for credit cards, without harming your credit scores.
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Explore travel rewards cards with unlimited miles you can actually use.
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Earn unlimited 1.5% cash back on every purchase, every day, with a cash back rewards card.
- Earn unlimited cash back on food and fun with a dining and entertainment rewards card.
