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

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If your credit limit is looking a little low, should you ask for an increase or just apply for a new card? Read on to learn how to decide. 

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.

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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