With the holidays in full swing, more shoppers are requesting increased credit limits as lenders get stingier about issuing them new cards, experts say.
The application rate for credit card limit increases is rising, as well as the approvals for them, the New York Federal Reserve said last month. Meanwhile, even as the rate for credit card applications remains robust, more are getting rejected, it said.
“After COVID, inflation and interest rates went out of control … people have less emergency funds for car repairs or buying presents,” said Brandon Robinson, president and founder of JBR Associates, which specializes in retirement strategies. “What they’re doing is using more credit card utilization – over 30% or well over 50% of their credit card allowance – and then can’t get approved for another card because their credit rating is down.”
Because of that, people either have to make more money or request a higher credit card limit, he said.
Who’s asking for higher credit limits?
For 2023 overall, the application rate for higher credit limits increased to 14.4% from 11.5% in 2022, with the largest increase seen among consumers with credit scores under 680, the Federal Reserve Bank of New York said. More of those requests have been approved and rejection rates have declined to 30.9% this year from 35.3% in 2022.
Learn more: Best credit cards of 2023
In October, the application rate jumped to 17.8% from 11.2% in the same month a year earlier, and from 12.0% in…
