Do you wish you had a higher credit limit on your favourite credit card? Would you rather have a credit limit increase than having to apply for a new credit card to increase your spending power? On the surface credit limit increases sound like a good idea — more access to financing. But should you really request a limit increase?

Let’s look at some good reasons for requesting a credit limit increase, and some not-so-good reasons some consumers might try to request an increase.

3 Reasons to Request a Credit Limit Increase

1.    You have a business credit card like the CitiBusiness credit card and your business is growing so rapidly that your current credit limit can’t sustain that growth. To continue growing at your current rate, your business would need an increased credit line, and your financials back that up.

2.    You use your credit card to pay for routine expenses for the purpose of accruing rewards points. You also pay off that bill quickly every month rather than carrying a large balance. Your routine expenses have increased and you’d like to keep paying with your credit card, but your credit limit won’t cover your monthly expenses. You might request a credit limit increase if your income is high enough that your lender feels you can continue to pay off the balance as usual.

3.    You don’t want a new credit card. Instead you want to combine all of your current credit card debt onto a single card to take advantage savings on your interest rates. But none of your credit cards have a high enough limit to let you consolidate your debt. Requesting a credit limit increase could be an alternative to applying for another new balance transfer credit card.

3 Reasons Not to Request a Credit Limit Increase

1.    You’ve maxed out your current credit limit, only pay off the minimum due each month, and simply want more access to funds. Credit lines aren’t a substitute for being able to support yourself. They’re a tool of convenience. If you can’t pay your current bills off regularly or at least significantly more than the minimum each month, you probably aren’t a good candidate for a credit limit increase.

2.    You just don’t want to bother looking for a new credit card that offers a higher limit. Don’t request credit limit increases just because you think it’s easier than a new application. Instead compare offers and try to get the best deal possible while still getting the spending power you need and want.

3.    You want the credit limit increase solely because you think it will help your credit score if you increase your ratio of available credit to current balances. If you want to improve that ratio, focus on paying off the debt you have first. If you can’t pay down that debt significantly, adding more temptation with a higher credit limit isn’t likely a good idea.

Why do you want to request a credit limit increase? Do you have a good reason? Can you handle the extra credit without going into more debt? Look at your motives and whether or not your payment history and financial situation would justify an increase in the eyes of your card issuer before calling to request a higher credit limit.