Credit Limit Increase Versus a New Credit Card: What’s the Right Choice?

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  • A higher credit limit can be good for your credit score, by reducing your credit utilization ratio.
  • When I didn't succeed at getting a higher limit on my travel card, I applied (and was approved) for a new one.
  • You might elect to skip the new card if you're happy with your existing credit card account and it offers the right rewards for your spending.

Have you ever looked at your credit limit and wished it was higher? There are a lot of reasons why you might want to increase your credit limit. It could reduce your credit utilization ratio, which could lead to a higher credit score. It'll give you more buying power, which could help if you have a big expense coming up and want to use the convenience of a credit card. Or maybe you've spent some time improving your credit score and want a higher limit to match.

But there's more than one way to get a higher credit limit. Yes, you can ask for a limit increase on an existing card -- or you can apply for a new card altogether. Which is the right choice, though?

A tale of two travel credit cards

I recently decided to request a credit limit increase on my travel credit card. I have some upcoming international travel planned and I wanted a higher limit in case of an emergency and to give myself more flexibility with a card that doesn't charge foreign transaction fees. Unfortunately, I struck out twice on this front and was denied an increase after I asked for one through the issuer's website as well as after calling to speak to a representative.

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Thanks to the Fair Credit Reporting Act, creditors are required to inform consumers of the reasons they're denied for credit. In my case, the reason was that I already have several higher-limit credit cards, and since I paid everything off in 2022, I no longer carry a balance forward -- meaning the card issuer isn't making money from me in the form of interest.

After that second rejection (and a few days of licking my wounds), I decided to apply for a new travel card. Lo and behold, I was approved -- and for a credit limit almost three times higher than the new limit I had requested on my old card. Here's a look at when you might want to either opt for a credit limit increase request or just apply for a new card.

Ask for an increase on an existing card

Originally, I just wanted an increase on the travel credit card I already had, and you may feel the same way. If you're not interested in managing another credit card, that's a great reason to pursue a limit increase instead. You might also think you have a pretty good shot at getting approved for that increase, especially if you've been a good customer. If you've always paid your credit card bills on time and kept your balance below 30% of the limit, you're more likely to be approved than someone who maxes out their card and is late with payments.

If your existing card has pretty sweet benefits, like a generous rate of cash back, you may also see no need to add a new credit card to your wallet. Why mess with success, right? Finally, if you think having a shiny new credit card may tempt you to spend more than you can afford to pay back every month, going for that limit increase instead is a good move.

Consider applying for a new card

If you're interested in different perks or benefits than what your current card offers, it could be worth trying to get a new card. I was perfectly happy with my old cash back travel card, but my new one is points-based, and I admit that I'm intrigued at the prospect of learning how these cards work and how to maximize them. As a personal finance writer, it's also in my best professional interest to expand my horizons, and I've never had a points credit card before.

Getting a new card might also offer you the chance to pursue a valuable sign-up bonus (yes, my new card has one of those, too) or take advantage of another perk, like an introductory 0% APR offer. This can be especially great if you have a large purchase to make or want to consolidate debt on existing credit cards and have a period of no interest to get it paid off.

When it comes to your credit card accounts, you have options. If you'd like a higher credit limit and are happy with your current card, ask for an increase. If you'd rather have some new perks and a chance at a sign-up bonus, applying for a new card might be right for you instead. Whichever you choose, if you can manage credit cards responsibly (meaning, don't charge more than you can afford to pay off in a given month), they can help you improve your credit score and add more convenience to your life.

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