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Updated on Wednesday, May 29, 2019
Do you have an account with American Express? Are you considering requesting a credit limit increase?
Perhaps the most important thing to remember is that, when it comes to requesting a credit limit increase with any financial institution, it’s not the how part that matters most – it’s the why. There are good reasons to request a credit limit increase, and there are bad ones, and understanding the difference between the two is critical. Before we tell you the steps to increasing your credit limit with American Express, we’ll discuss this crucial topic.
Why increase your limit in the first place?
Let’s get this out there right off the bat: Requesting a credit limit increase just to go further into debt is not a smart strategy. As you probably well know, failing to pay off your credit card in full and paying big money in interest each month is not a great way to build wealth. So if you’re requesting a higher credit limit just to borrow more money on non-essential purchases each month, you should probably reconsider.
There are two good reasons to request a credit limit increase. First: You use your card responsibly, want to earn more rewards and do not have a high enough credit limit to do so.
The second (and related) reason is to lower your overall credit card utilization rate. Your credit card utilization rate is a measure of how much of your available credit you use each month. The math is pretty simple – just divide your total credit card balance by your total credit card limit.
So if you have a $5,000 balance and a $20,000 credit limit, your credit card utilization rate is 25%. Most financial experts advise maintaining a utilization rate of no higher than 20% to 30% across all of your cards.
Lower utilization rate = better credit score
“Amounts owed” on your cards accounts for 30% of your overall FICO credit score. Thus, the lower your utilization rate (how much you owe compared to your overall credit limit), the better your credit score is likely to be, and the easier it may be for you to borrow money at favorable interest rates.
Going back to the hypothetical example above, if you were to charge the same $5,000 each month but have your credit limit raised from $20,000 to $30,000, your utilization rate would drop from 25% to under 17%. The lower, the better.
How do banks decide?
Of course, the decision to raise your credit limit isn’t solely yours. Your credit provider has to agree to the request.
If you have a clean credit history, a healthy income (relative to how much you charge each month), and keep your monthly balance low and make your payments on time, chances are you’ll have your request approved.
In fact, if you’ve proven yourself to be a reliable borrower over a prolonged period of time, many financial institutions will proactively raise your credit limit without you even having to make the request.
On the flip side, if you carry a large balance, have a checkered credit history and have been inconsistent about paying your monthly bill on time, chances are your lender will be hesitant to increase your credit limit. If you fit into the latter category, you’re best served spending time cleaning up your financial act and proving yourself a reliable borrower before requesting an increase.
Requesting an increase from American Express
The good news is that institutions such as American Express have made it fast and easy to request a credit limit increase online with just a few clicks. To request a credit limit increase with American Express, start by logging into your account at www.americanexpress.com.
Once you’ve logged in, go to the Home screen.
Next, click on Account Services.
From there, click on Increase Your Credit Limit.
You’ll then be asked to fill in the information requested to get a line of credit increase, including your account number, your current credit line and the amount you’d like to increase it to, as well as your total annual income. Then click “Continue.”
Once you’ve ensured that all the info you have entered is correct, you can formally submit your request and wait to see if you have been approved.
For those who prefer old-fashioned human interaction, you can also request a credit limit increase by calling the American Express customer service line at (800) 528-4800.
A few housekeeping items to keep in mind regarding a request for an American Express credit line increase:
- You cannot request a credit limit increase until you’ve had your American Express card for more than 60 days.
- If your request is approved, you’ll need to wait at least six months before you can request another increase.
- If your request is denied, you will have to wait at least 90 days before you can make another request.
- In order to maximize your chances of approval, it’s generally recommended that the new credit limit you request is no more than three times the size of your current limit.
- One of the best features of American Express is they don’t do a hard pull of your credit report for credit limit increase requests, meaning your credit score won’t be adversely affected.
Your credit limit was increased. Now what?
Let’s assume all goes well and your credit limit is increased. What should you do next? Ideally, nothing. If you started this process for the right reason – to improve your credit score by lowering your utilization rate – then having your limit increased should have no bearing on your spending habits. Simply continue spending at the same level you were before your limit was increased, and let your credit score reap the benefits.