Credit Card Limits

Understanding your credit card’s credit limit is an important facet of owning and using a card.  We all know you can get into trouble exceeding your limit, and that trouble could lead to fees as well possibly a higher interest rate on your card as well as a lower credit score.

CNN/Money has a pretty concise article listing some of the benefits to not only knowing your credit card limit, but also the advantages of increasing that limit.  The article notes that keeping a low debt-to-limit ratio is a good move since the “lower your debt-to-limit ratio, the better your credit score will be. And to that end, there are two basic ways to improve your debt utilization: raise your credit limit or lower your debt.”

The article goes on to list some of the pitfalls you should avoid with credit cards making the point that “signing up for new cards to boost your total available credit and make your debt utilization appear lower can work against you…and opening new accounts can even lower your credit score”