Credit cards make life much easier by knowing that you can pay for things even without ready cash. If used responsibly, it helps build a good credit score and history. Yet sometimes, a credit card’s limit may become inadequate for your expenses, especially when you live in a costly city like Singapore.
Moreover, you may also want to use it for big purchases or projects like a home renovation or starting up a business. So, if you are wondering how to increase this limit to put up with your financial goals, then this post is for you.
How is Credit Limit Determined?
A credit limit is a maximum amount you can spend on a single credit card. Cardholders do not have the same credit limit as the issuing bank determines and assigns this limit. These factors assure them that users will be able to pay them without issues.
Determining Factors on Credit Card Limits
1. Annual Income
Income is a crucial factor since it determines the amount you can afford to pay. Still, a high income alone does not guarantee that you’ll get a higher credit card limit as other factors still come to play.
2. Credit History
Your credit history, which includes your payment history, helps banks assess your credit risk and assign a safe credit limit.
3. Credit Utilization
Banks also look at how you spend on your credit card. If you spend less than 30% of the allowed limit, you’ll likely be approved for a higher limit.
4. Debt-to-income Ratio
Using the information you’ve submitted and data from your credit report, the card issuer will be able to compute your debt-to-income ratio. Banks prefer a lower debt ratio and could give you a higher credit card limit.
5. Type of Credit Card
Credit cards have pre-defined features, and one is these could be the credit limit. Some specific types have a pre-defined credit limit common to all cardholders of these types and regardless of other factors.
6. Your Other Card’s Credit Limits
Banks may also take a cue from your existing card’s limits. If your other cards have high credit card limits, the bank may approve your request right away.
7. Co-applicant’s Credit Qualifications
If you are jointly applying with another person, the bank will consider your and your co-applicant’s income and credit qualifications.
You may only learn of the approved credit card limit when the bank issues the credit card. At times, a bank may also automatically increase your limit for being a responsible user. Thus, always use and maintain your credit card responsibly to get higher chances of approval and higher credit lines.
What is the Maximum Credit Limit Allowed in Singapore?
The maximum borrowing limit on unsecured credit like personal loans and credit cards is governed by the Monetary Authority of Singapore (MAS). MAS has introduced the Credit Limit Management Measure (CLLM) to help cardholders and other individuals avoid borrowing beyond their means.
Depending on your age, income, or assets, your total credit limit across all your credit cards must be within these guidelines. Check out the table below:
|Annual Income||Assets||Regulatory Credit Limit|
|55 years old and below||Above 55|
|S$30,000||–||Up to 2 months of income||–|
|S$30,000 to S$120,000||–||Up to 4 months of income||–|
|S$120,000||Net personal assets: at least S$2M
Net financial assets: at least S$1M
|No regulatory limit||–|
|≤S$15,000||Net personal assets: S$750,000 to S$2M||–||Up to S$2,500|
|S$15,000 to S$30,000||Net personal assets: S$750,000 to S$2M||–||Up to 2 months’ income|
|S$30,000 to S$120,000||Net personal assets: S$750,000 to S$2M||–||Up to 4 months’ income|
|S$120,000||Net personal assets: S$750,000 to S$2M||–||No regulatory limit|
|Any||Net personal assets: Above S$2M||–||No regulatory limit|
On Unsecured Loans
Also under MAS’ CLLM guideline, the limit on unsecured loans is set up to 12 months of the monthly income. This means that a borrower who has an existing debt that does not exceed the limit can continue to draw on their existing cards or borrow from other financial facilities.
However, a borrower who has accumulated a debt that exceeds six times their monthly income will not be granted an additional loan or an increase in a credit limit that will cause them to exceed the 12-month limit.
From the 24-month limit last 2015, the limit was reduced to 18 months in 2017. Effective June 1, 2019, the limit was further reduced to 12 months. The limit on the aggregate amount applies across all financial institutions. When you exceed the set limit for three consecutive months, you will not be able to
- Obtain new credit cards or new unsecured loans
- Get additional credit on existing credit cards and all other financial institutions
- Request for a credit limit increase
Yet, there are ways to avoid the negative effects of this policy. One way is to update your current income especially if you’ve had a raise since 2015 and have not updated since then.
Why is Your Credit Limit Lower Than the MAS Amount?
The approved credit limit on your card is not always equal to the regulatory limit on the MAS guideline. Remember, these are just guidelines, and the issuing bank may grant an amount lower than this.
In general, here is the summary of MAS Credit Limits in Singapore (2022):
|Annual Income||Credit Limit (≤55 Years Old)|
|S$15,000 to S$30,000||Min. of S$30,000 or 2 times the monthly income|
|S$30,000 to S$120,000||4 times the monthly income|
|>S$120,000||No regulatory limit|
How to Get a Credit Limit Increase?
You may have got your credit card through an application, pre-approval, or prequalification. Whichever way, you can still make a direct request for an increase from the issuing bank. Requesting an increase in credit card limit may take some time. Still, you may try these options if you need to use your card for urgent use or a big purchase.
1. Apply for a temporary credit limit increase
You can apply online for a temporary credit increase if you are using your card soon for a significant purpose. Whether it is a wedding, another important life event, or other compassionate purposes, you must prepare proofs and documents to vouch for your request.
Moreover, a temporary limit increase is also valid for a certain period as the bank allows. You need to pay the temporary credit before the expiry date. Otherwise, you’ll pay an overlimit fee.
2. Request for a credit limit review
If you want a permanent credit limit increase, you can submit proofs of income increase such as
- Your payslip
- CPF statement
- Income tax assessment
3. Make an advance payment on your credit card
This option is also helpful if you need a temporary credit limit increase to make way for a big purchase. You may have to contact your issuing bank to check on this option’s exact details and procedures.
Other Effective Ways to Increase Credit Card Limit
Aside from making a direct request, here are smart and effective ways to get an increase:
1. Boost your credit score
Your credit score determines creditworthiness, and this is a crucial factor when banks set a credit limit. To maintain and boost your credit score:
- Always pay your bills and monthly installments on time
- Use your card frequently
- Manage your existing cards well
2. Update your personal information
A substantial increase in income or an increase in savings could make you eligible for a higher credit limit. If you use a card with a pre-set limit, you can inform the bank of any financial changes and ask for a higher limit.
3. Justify your request for an increase
When asking for a request, do not act desperate. Instead, tell them good reasons why you deserve an increase. It could be
- Paying balances on time and in full every month
- Using only 30% or less of the card’s allotted credit limit
- Never missing a payment
- Being a loyal customer for years
- An increase in financial status
Can You Get a Credit Limit Increase With Another Credit Card Provider?
MAS’ regulatory limit on credit is imposed on financial institutions and not on individual customers. Thus, you can get a credit limit with your existing credit card providers.
3 Best Credit Cards for Credit Limit Increase
A higher limit means greater financial freedom. But with this freedom comes responsibility too. If you need a credit limit increase, our top picks are
1. OCBC Titanium Rewards
- Annual Fee of $192.60 (waived for the first two years)
- E-commerce protection
- 4 miles points for every S$1 spent on fashion retail
- 0.4 miles on all other spend
- S$10,000 annual spend earns you a fee waiver
- 2% cash rebate on BEST Denki purchases
OCBC Titanium Rewards is an ideal card for those whose spending involves shopping and travel. All your retail purchases will allow you to earn miles points. Hence, you’ll also save more on your next overseas trip.
You may also get lounge key access to over 1000 lounges by paying a minimal fee of S$27 per visit per person.
2. Standard Chartered Unlimited Cashback Credit Card
- Annual Fee of $192.60 (waived for the first two years)
- 1.5% cashback on all types of spending
Standard Chartered Unlimited Cashback is an all-rounded card for those who also want to enjoy cashback on their purchases. Users will enjoy an unlimited 1.5% cashback with no minimum spend. These features make it an ideal card for everyday usage and expenses like petrol, groceries, dining, and even shopping.
3. POSB Everyday Card
- Annual Fee of $192.60 (waived for the first year)
- 10% cash rebates on food delivery
- 3% cash rebates on utilities and telecommunications
- Up to 28% fuel savings at SPC
POSB Standard Everyday Credit Card is an ideal card for those whose spending involves basic daily needs like food, gas, and wellness. So, if you love shops like Sheng Shong and Watsons, this card is an excellent option for a credit limit increase. Moreover, it is also one of the rare cards that offer cashback on utilities and telco bills. Find out more on the best credit cards in Singapore for overall spending
Considerations Before Applying for an Increase in Credit Limit
Applying for an increase in credit limit could boost your spending power. Still, it may also come with undesirable consequences. You should carefully evaluate your financial status and other essential factors before applying for a credit limit increase.
Identify your spending needs
A spending need may not be the same for everyone. Thus, it is crucial to identify where you’ll use your credit card the most. This step will also allow you to align your priorities and determine how much you’ll be spending on each category.
Getting an increased credit limit may mean more debt. This increase could also mean paying higher interest and more fees. A failure or difficulty in managing debt may harm your credit score.
Benefits of Having Higher Credit Limit
Your growing change in financial needs will ultimately make you consider a credit limit increase. Below are some of the benefits should you be able to get approved:
Immediate access to loans and emergency funds
A higher credit limit gives you peace of mind knowing that you’ll have a resource for emergencies.
Improve your credit utilization ratios
A raise in credit limit will reduce the percentage of funds being used and result in a lower credit utilization ratio.
Earn more rewards
Having a card with a higher credit limit also increases rewards such as cashback, miles, and points, which you can convert into a helpful purchase.
Applying for an increase in credit card limit needs careful evaluation of your credit standing. Once granted, you must always practice financial discipline. Otherwise, it could lead to overspending, debt accumulation, and, worst, negatively impact your credit score.
- Always keep a close tab on your credit card bill and pay dues diligently.
- Each person has a unique financial situation; only consider essentially valid reasons to apply for an increase.
- Try to pay your dues in full to avoid accumulating interests.
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