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PHOTO MIO JAPAN/DigitalVision/Getty Images September 08, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Jacqueline is a contributor for Bankrate and has worked with more than a dozen financial brands, including , , , , , , , SoFi and Northwestern Mutual, providing thoughtful content to give readers insight into complex topics that they likely didn’t learn in school. You can learn more about her work and connect with her on or at . Sometimes . Liz Bingler is an Associate Editor for CreditCards.com and Bankrate, where she focuses on product news and reviews. As an editor, her goal is to produce content that will help people to make informed financial decisions. Bankrate logo

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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Bankrate logo

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At Bankrate, we have a mission to demystify the credit cards industry — regardless or where you are in your journey — and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to: Meet you wherever you are in your credit card journey to guide your information search and help you understand your options. Consistently provide up-to-date, reliable market information so you're well-equipped to make confident decisions. Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you. At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next. Bankrate logo

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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Life is full of surprises — some good and some bad. Waking up one day to a credit limit increase that you didn’t apply for can be a good or bad surprise depending on how you look at it. Let’s examine why credit card issuers increase credit limits without input from the cardholder and what the fallout (good and bad) of an increase can be.

What is a credit limit increase

Your is the total amount you’re allowed to charge to your credit card at once. A credit limit includes any new purchases, old purchases that haven’t been paid off and any balance transfers. Your annual fee is also charged against your credit limit. For example, if you have a $10,000 credit limit, that means you can have a balance of up to $10,000 on your credit card. Once you reach $10,000 you won’t be allowed to spend anymore. Generally, if you try to make a charge that will your transaction will be declined.

How is your credit limit determined

Credit card issuers use two different methods to . Some credit cards come with a preset credit limit. The other option is that the lender looks at your credit score and credit history to try to gauge whether or not you’re a responsible borrower and what type of credit limit and interest rates you can qualify for. The stronger your is, the higher your limit will likely be.

Why did my issuer increase my credit without asking

Circling back to unprompted credit limit increases, why do credit card issuers do this without asking? If you pay your bill on time each month and have overall managed your credit card responsibly, there may come a day when your credit card company alerts you that your credit limit has been increased. In some cases, they may offer you an increase and give you an opportunity to accept or deny it, but sometimes they do this without asking for your input. One of the main reasons that credit card issuers do this is to help increase their customer retention and to encourage responsible borrowers to spend more on their credit cards each month. But why did they choose you? This may happen because you are considered a responsible customer. It can also happen if you report an increase in income. In some cases, credit card issuers have a built-in path for customers that eventually leads to a higher credit limit after being a customer for a while. If you want to know why your credit limit increased, don’t be afraid to ask why it happened so you can better understand how it could happen again in the future.

Benefits of a credit card limit increase

It can be surprising when your credit limit is increased without your prompting it. On the bright side, there are a lot of benefits that come along with a credit limit increase that may work out in your favor in the end.

Improved credit utilization

One of the most important factors when determining your credit score is your . Your credit utilization ratio represents how much credit you have available to you versus how much you’re using. This ratio accounts for 30 percent of your score and the lower this ratio is, the better. When your credit limit is increased, your credit utilization ratio drops by default. Just be careful not to spend up a storm or your ratio will rise again.

More purchasing power

If you have some on the horizon, and have a plan to pay for them, having a higher credit limit can give you more purchasing power. The more you use your credit card, the more rewards you can gain. Just make sure you can afford to before you make any purchases so you earn rewards without going into debt. On the flip side, if you have credit card debt to pay down on other cards or are working on building your savings, having an increased credit limit may create spending temptations that distract you from your goals. Keep a close eye on your spending if you receive an automatic increase.

Better terms in the future

Having a higher credit limit, and a lower credit utilization ratio, can lead to having a better credit score. The better your credit score is, the better terms and interest rates you’ll qualify for in the future. Using a higher credit limit to strengthen your score can pay off big time down the road.

Soft credit inquiries

Generally, an automatic increase involves only a soft inquiry (an issuer requires your consent to make a hard pull on your credit). . That being said, an automatic credit limit update from a lender is a great way to increase your amount of available credit without dinging your credit score by applying for more credit.

What if I didn t want an increase

An automatic credit limit increase can come as a surprise but for the most part, it should be a good one. Your credit score may improve thanks to having a lower credit utilization ratio. Plus, you’ll be able to charge more if you ever need to (you shouldn’t just because you can) and you can collect the cardholder rewards you otherwise miss out on when you pay in cash. If you’re struggling with overspending and think the new limit will just encourage more credit usage, you can call the issuer to request they reset your limit to its previous amount. Given the likely positive boost to your credit (and potential equal opposite reaction to closing it), it’s worth considering some other options first. For example, consider stashing away your credit card to make it harder to use on purchases you can’t afford. To get ahead of automatic credit limit increases, give your credit card issuer a call and request it never increase your credit limit without your consent. Follow up on this conversation in writing so you have a written record of the agreement.

The bottom line

Overall, automatic credit card limit increases are a good thing if you can manage the increased spending limit. Your credit score can benefit, you’ll have more spending power should you need it and managing a higher limit responsibly can help you work toward better rates and terms in the future. If you’re against receiving automatic credit limit increases, however, don’t be afraid to tell your lender not to do them. SHARE: Jacqueline is a contributor for Bankrate and has worked with more than a dozen financial brands, including , , , , , , , SoFi and Northwestern Mutual, providing thoughtful content to give readers insight into complex topics that they likely didn’t learn in school. You can learn more about her work and connect with her on or at . Sometimes . Liz Bingler is an Associate Editor for CreditCards.com and Bankrate, where she focuses on product news and reviews. As an editor, her goal is to produce content that will help people to make informed financial decisions.

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