Should I get a new credit card or increase my limit?

Sometimes as your financial situation changes, you outpace your available credit. Expenses both planned and unplanned may mean you’re using your credit card more often. Or perhaps you got a new job or a raise, and your buying power has increased.

Whatever you have going on, expanding your available credit may offer more flexibility in your day-to-day spending. There are several ways to expand your credit, but two common methods include getting a new credit card or asking for a credit limit increase on an existing card. 

Key takeaways

  • To increase your total available credit, you could try applying for a new credit card or asking for a credit limit increase.
  • Neither option is automatically better than the other. What’s right for you depends on your personal circumstances.
  • When deciding how to access more credit, you can consider things like the impact on your credit scores and how many new credit applications you’ve made recently.

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Increasing credit limit

One way to access more credit is to request a credit limit increase. As part of the approval process, your issuer will review your credit history and consider how much additional credit you asked for. The lender may also look at your credit scores, how long you’ve had your card and any previous requests you’ve made to increase your limit.

Getting approved for an increase may be easier if you’ve used credit responsibly by doing things like paying your bills on time. Credit card issuers may also ask for updates on your income, employment and monthly mortgage or rent payment and take those factors into consideration. 

Sometimes a creditor may come to you with an offer to bump up your limit. For example, a credit limit increase might be offered to customers who have demonstrated positive financial habits and behaviors. This includes keeping income information current and remaining in good standing by making monthly on-time payments.

Some Capital One credit accounts aren’t eligible for a credit limit increase even when you use your card responsibly in those ways. This might be the case if, for example, you already have a line that adequately serves your past spending needs. If you want to learn more, check out some frequently asked questions about credit limit increases.

Applying for an additional line of credit

The application process for a second credit card may be similar to the process you followed when you applied for your existing card. Card issuers may look at factors like your credit report, credit history, credit scores and income to determine whether you’re a good candidate. 

If you’re approved, a new line of credit could offer more than just additional access to credit.

Your new card could also offer additional benefits or a chance at better rates. If you’re planning a trip, you could earn rewards miles to put toward it. Cash back rewards could add up over time if you use the card for everyday purchases like gas and groceries.

Should I get a new credit card or increase my credit limit?

Decisions about applying for more credit, and how you do it, are a matter of personal circumstances. Here are a few things you might consider:

Impact on credit scores

Getting a new credit card or increasing your credit limit could impact several factors that contribute to your credit scores:

  • Debt: When you increase your total amount of available credit, by getting a new card or increasing your credit limit, it lowers your overall credit utilization ratio. According to the Consumer Financial Protection Bureau (CFPB), if you can keep the amount of available credit you’re using low—experts recommend 30% or lower—it shows lenders you’re responsible and strengthens your credit scores. 
  • Credit age: Opening a new credit account can lower your overall credit history, which is the average age of your open accounts. Typically, a longer credit history is better for credit scores. 
  • New credit applications: An application for a new card will trigger a hard inquiry. Some lenders also conduct a hard inquiry for a credit limit increase, but Capital One doesn’t. Too many hard inquiries in a short period of time may have a negative impact on your scores.

How many credit cards you already have

There’s no rule about how many credit cards you should have. It depends on your needs and circumstances. But it’s always worth asking yourself what an additional one might do for you—whether it’s good or bad. 

  • Could a new card offer an introductory rate that would give you time to pay off a big purchase without paying interest? 
  • Could it offer rewards or benefits you don’t already have? 
  • How do you feel about having another account to manage?

Your spending habits

When you have more available credit, it might be tempting to spend more. But spending more could make it harder to pay off your balance in full. Carrying a balance can increase your credit utilization ratio and cost you in interest. 

You can also consider whether your need for extra funds is only temporary or occasional. Capital One cardholders are never charged over-the-limit fees. View important rates and disclosures. If your account has access, you can use the Confirm Purchasing Power tool to check whether an overlimit purchase may be approved. Every user on a card can also disable the ability to spend over their credit limit in overlimit preferences.

Your plans for the immediate future

Planning on taking out a loan for a new car, your home or another large expense in the near future? Remember that anytime you open a new credit card, it results in a hard inquiry. Capital One doesn’t, but some lenders might also conduct a hard inquiry for a credit limit increase request. And the resulting drop in credit scores, however temporary, could hurt your chances of qualifying.

New credit card vs. credit limit increase FAQ

Check out these answers to frequently asked questions about getting a new credit card versus getting a credit limit increase:

There’s no rule dictating how often you can get a new credit card. But doing it too often might not be ideal. That’s because applying for a card triggers a hard inquiry. A single hard inquiry from one credit card issuer generally has a small impact on your credit scores. Multiple inquiries in a short period of time might have a more significant effect and signal to lenders that your financial situation has worsened, according to the CFPB.

You can ask for a credit limit increase whenever you want. It depends on your unique circumstances. You may want to request one if your credit score has improved, your income has increased or you’ve had your card for at least six months.

Policies for credit limit increases differ from issuer to issuer. At Capital One, for example, most accounts that have been open for only a few months are too new to be considered. If an account has received an increase or decrease in the past few months, it typically won’t be considered either.

Whenever there’s an increase in spending power, there’s a temptation to overspend. The CFPB recommends paying off your balance in full whenever possible to keep spending in check. And apply only for the credit you need. 

Capital One doesn’t, but some lenders conduct a hard inquiry when processing a request to increase a credit limit. If that’s the case, you may experience a temporary dip in your credit scores.

In general, additional credit is usually offered or given to customers who have shown responsible financial habits and behaviors over time. You can learn about how Capital One handles credit limit increases in this article about Capital One’s credit policies.  

If you receive a credit limit increase you’d rather not have on your Capital One card, you can call the customer service line at 800-CAPITAL (227-4825).

How to tell if you should get a new credit card or increase your limit

If you’re trying to decide between asking for a credit limit increase or applying for an entirely new credit card, think about why you’re applying for more credit and whether you’re happy with your current credit card. If you like your current card, asking for an increase could be the right move. But if you’re looking for additional rewards or a better rate, opening a new line of credit may be the right option. No matter what you choose, always remember to use credit responsibly and spend within your means.

Ready to apply for a new credit card? Check for pre-approval offers with no risk to your credit score.

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