Are you contemplating a temporary credit limit increase on your credit card? If you earn RM36,000 or less, you’re only allowed to own credit cards from a maximum of two issuers, with each maximum credit limit of two times your monthly income, based on Bank Negara Malaysia guidelines.
For example, if you earn RM2,800 a month, your maximum permissible limit is RM5,600 per credit card issuer. For those who earn above RM36,000, you may be able to get the credit limit increase that you want, subject to your credit status and income.
Increasing the credit limit on your credit card gives you the chance to maintain a low credit utilisation rate, which in turn can help increase your credit score. A good credit score will serve you well when you apply for personal finance products, including home loans, personal loans, and credit cards.
A score of 718 – 850 is considered above average, 651 – 717 is fair and anything below 650 will make it either hard or almost impossible to obtain any credit from the banks. Click here to read our detailed FAQ on credit reports CCRIS and CTOS.
That said, there must be a reason why you’re looking for a temporary increase in credit limit. Before requesting for one, you should know whether you’d like a permanent or a temporary credit limit increase.
When it comes to temporary credit limit increase, the application process is typically easy and fast, requiring only two or three steps before approval. Many among us go for a temporary credit limit increase to address short-term needs, at times arising out of an emergency situation.
Here are 4 things to know about a temporary credit limit increase on your credit card.
1. Common reasons to apply
One of the common reasons to request a temporary credit limit increase is when you’re travelling overseas, especially to countries with a high exchange rate. Cardholders use the additional credit line to fund travel-related expenses like booking a hotel room or purchasing flight tickets.
Most temporary increase only lasts 30 days, so keep in mind you can only use it for short holidays and not for a year-long backpacking adventure across continents.
While a temporary credit limit increase is often used for travel purposes, there are those who use it to cover unexpected expenses, such as funeral, hospitalisation, or wedding expenses.
Having said that, even an air miles credit card goes a long way in ensuring you get discounts on your expensive international flight tickets. But you must take a decision after carefully considering the minimum spend requirements, air miles conversion rate and income requirements of your chosen air miles credit card. Read our Air Miles Credit Card 101 to understand how they work, and click here to find out which are some of the top travel credit card options for you to choose from.
2. Best time to apply
Just because applying for a temporary increase is faster and easier, it doesn’t mean you can take it lightly. Timing is everything, and before you apply, make sure that:
- Your salary has increased: A solid proof of your salary increase makes your application stronger.
- You have good credit score: A clean credit report will increase your chances.
- You have a healthy debt-income ratio: There’s no point in earning a high salary if you’re drowning in a huge amount of debt, and banks will see you as less creditworthy. Give banks the confidence that you’ll be able to pay off your credit cards bills.
- You have been making payments consistently: If you’re prompt and consistent with your payments for a year, you have better chances of getting the request for a credit limit increase approved.
3. When you should not apply
Now, these are the signs that you should wait before applying for a credit limit increase:
- You’re carrying too much debt
- You’re falling behind on your bills/payments
- You barely make the minimum payments
- The temporary increase offer has a higher rate
- You’re prone to overspending
4. Application process
Most banks have made it convenient for applicants to apply for a temporary increase. This means the process is a lot faster and easier compared to applying for a permanent increase.
You can either call the bank’s 24-hour call centre or fill up the form and email, fax or submit the completed form and required documents to the bank’s nearest branch in person.
Find out the required documents for different types of earners below:
|Variable Income Earners||
Important things to keep in mind before applying for a temporary credit limit increase
Just a crucial reminder. An increased credit limit doesn’t mean free funds, and you’ll still have to pay it back in full in time to prevent high late payment charges and adverse credit score. Here are few pointers to keep in mind before you apply for a credit limit increase.
- Ensure you’ll have enough funds before your next credit card bill payment deadline to be able to clear all outstanding dues.
- Be as frugal in your credit card spends as possible — even if you have increased your credit limit. Try your best not to come even close to maxing your credit card limit as the accumulated debt can weigh-in heavily on your funds going ahead.
- If you’re planning to request a credit limit increase to help you in a foreign trip, read our tips on how to holiday debt-free, and other cost-saving travel hacks.
- A travel insurance comes in handy to safeguard your interests in a foreign country. Read our blog on how travel insurance shields your trips.
- Ideally, you should have an emergency fund in place to take on any unanticipated development, and not rely on a credit limit increase. Read our blog on how to build an emergency fund.
- And if you’re planning to take a personal loan (check out some of the top PL options), these are the common mistakes to avoid while applying for one.
Lastly, don’t forget to check out our other credit card suggestions:
- Cheap and Good: 7 Affordable Credit Cards with Great Benefits
- Top Petrol Credit Cards in Malaysia That Let Us Drive Around for Less
- 7 Credit Cards with Great Online Shopping Benefits
- 7 Dining Credit Cards That Help You Save More While Eating Out
- 5 Credit Cards with Superb Joining Benefits You Must Check Out