If you have a solid income and good to excellent credit, you may be able to qualify for a high limit credit card. Cards that fall into this category work just like any traditional credit card except for one big factor — your higher credit limit may mean a higher borrowing threshold.
How high can your credit limit climb? That really depends on your income, your FICO score and the exact credit card you apply for. It also depends on when you applied for a high limit card and whether you still have it. Prior to the financial crisis of 2008, it was common for people to have credit cards with limits of up to $50,000. Credit card companies have since slashed limits, and now a high-limit card is typically considered any credit card with a limit of $10,000 or more.
Benefits of high limit credit cards
You may be wondering why anyone would want a credit card with a high limit. Won’t a higher limit just lead to more debt and stress?
The answer is simple; higher credit limits make it easy to borrow money for the long haul — or in a last ditch effort to save your finances.
A credit card with a $3,000 limit won’t help much if you carry a credit card for emergencies and face $5,000 in sudden, surprise bills, after all. With a limit of $10,000 or more, however, you could cover your bills and pay them off over time without knocking your finances entirely out of whack.
In addition to offering more wiggle room for emergencies, also note that high limit credit cards can help improve your credit score provided you keep debt levels low. This advice is predicated on the fact your credit utilization – or the amounts you owe in relation to your credit limits — makes up 30% of your FICO score, the second highest amount.
Typically, experts also suggest keeping your credit utilization below 30% to keep your credit score in tip top shape. This means carrying balances below $3,000 if your credit limits are $10,000.
Obviously, it’s a lot easier to keep your credit utilization low when you have high credit limits. After all, carrying the same $3,000 in balances against $5,000 in credit limits means having a credit utilization ratio of 60%.
Qualifying for a high limit credit card
There are no hard and fast rules that dictate whether or not anyone can get approved for a high limit credit card. Different credit card issuers have their own approval criteria they aren’t keen on sharing, after all. Not only that, but several factors are typically considered when you apply for a credit card, and your unique situation may dictate how much you can borrow. There are also factors left up to interpretation.
For example, Chase says three main factors that positively affect your credit score — and presumably your ability to qualify for a new, higher limit card — include on-time bill payments, a long and diversified credit history and using less than 30% of your credit limit. Factors that can affect your score negatively include late payments, using more than 80% of your credit limit, and “too many requests for new credit,” however. But who decides how many is too many? At the end of the day, different card issuers may have a different number in mind.
Still, there are some general rules that determine who can and can’t get a high limit credit card. For the most part, qualifying for a high limit credit card requires an income that justifies more borrowing power as well as few debts and financial liabilities.
On top of those factors, a high credit score will certainly help your cause. According to myFICO, the highest chances for credit card approval and higher limits go to those with “very good” credit — or FICO scores of 740 or more.
Also, keep your eye out for credit cards that are more likely to offer higher limits before you apply. Cards that fall into this category are typically ones meant for big spenders, or cards that offer lucrative rewards and cardholder perks in exchange for an annual fee. For example, you may be more likely to get a high limit with the Chase Sapphire Reserve® or Citi Prestige® Credit Card than you would with a card that doesn’t offer any rewards.
Maximizing your high limit credit card
Once you have a high limit credit card in hand, there are several do’s and don’ts to be aware of. The following tips can help you get the most out of your high limit card while keeping your credit score in good shape:
- Keep your credit utilization low (or at zero). Experts suggest keeping your credit utilization below 30% for the best results, which should be easier if you have a higher credit limit to begin with. Keep in mind, however, that the average credit card interest rate is well over 17%. If you need to borrow money for the long-term, you may be better off with a personal loan with a lower rate and fixed repayment period.
- Consider cards that offer zero interest for a limited time. If you have your heart set on borrowing with a credit card but need time to pay your balances off, you may want to consider a balance transfer card. Some cards in this category offer 0% APR on balance transfers and purchases for a limited time, meaning they can serve as a “free” short-term loan, provided you pay your balance in full before your introductory offer ends.
- Use credit with a plan or in conjunction with a monthly budget. Be careful you don’t see a higher limit as an excuse to borrow money you can’t afford to repay. We only suggest using credit cards for planned purchases and alongside a monthly budget that will keep your balances under control.