Negotiate Your Credit Line Increase Like a Boss
A credit line increase is a terrific tool to improve your financial standing and experience life in HD.
But there are rules.
Not the kind of rules that will force you to walk across burning coals or recite the constitution.
Rules that will allow you to apply for limit increases at the best possible time for the best possible rewards. These are NOT the typical “don’t do this” annoying checklist rules that feel unattainable and nonsensical.
These are the types of rules that will allow you to make your move at your convenience, for your gain.
Rule 1: Timing that doesn’t suck
Remember watching survival shows back in the early 2000s? What was the cardinal rule for a warm, toasty shelter? Don’t start building when it’s already raining.
The same principle can be applied to finance. You might be able to negotiate an increase, but it’s not going to be on your terms.
There are a few things you want in place before you make that call to your credit card company:
- Your credit utilization is under 30%
- That your credit rating is hot (check your credit report!)
- Your bank account is healthy and there is no derogatory information on it
- Income payments take place regularly
The most important thing is that your credit line is maintained, but used. This means that you make regular purchases with your card. You make your payments on time and your payment history is clear. And, you settle your credit card balance every month.
Rule 2: The increase works for you
Sure it’s great to have a $100,000 credit line. It’s also great to manage your payments without breaking into a hot sweat every time the bill payment pings on your phone.
Your credit line should enable you to have access to the best in life. At the same time, it should add value, automate your finances (learn more in Ramit’s book, I will teach you to be rich), and afford you access to some epic rewards.
Rule 3: You’re in control
Now, this rule is the one that is often ignored and tends to make us feel vulnerable to the core. If you’re still living a trapped (Ramit refers to this as the ordinary work-yourself-to-a-standstill to barely afford a cup of coffee) or in treadmill life (where maybe one day you’ll get to travel), it’s time to gear up a notch and realize that banks exist because we let them.
They provide a convenience, and once that convenience no longer exists, we will quite literally take our money elsewhere.
Thinking of calling BS on this? Just consider this.
They need our capital in savings to create a buffer for lending. They need to provide loans in order to make money on the interest charged. Get it? They need your savings and your credit. Yes, even Bank of America has advertising campaigns targeted at new clients.
Now that you understand your buying power, to request a credit limit increase should articulate your request confidently. Our negotiation techniques are hardwired for a positive outcome and can be applied from credit limit increase requests to asking for a raise. Without sounding cheap.
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Now for the “how”
While it’s simple enough to do an online limit increase through your online profile with the chosen card company, some companies prefer to do the final verification telephonically.
When the call comes through (and expect that call to come through), it’s important to remember Ramit’s cardinal rules of negotiation.
A special tip from Ramit: Always take notes of the call and get as much information as possible. This includes names, dates, numbers.
Step 1: Ask for what you want
Simply ask. Something as simple as “I’d like a limit increase on my credit card” is a good place to start. But if you want to take it a step further, add in “and I’d like to see about a reduction in that APR.”
Step 2: Possible pushback
If there is a slight pushback on either, remind the consultant that you’ve been a customer for X years. In Ramit’s negotiation techniques, he explains that it’s far more cost-effective for a bank to retain a customer than to onboard a new one. In fact, the cost to onboard new customers is between $350 and $2,500.
Step 3: Another nudge if needed
If there is still pushback or the limit is not what you desire, you need to gear up. Ask the consultant to view your history. Ask again how the consultant can help you. Repeat this process with a supervisor if you’re referred to them. Remember to end strong and use phrases like, “I understand,” “I want,” and “I’d like.”
If you’ve remained firm, you should have what you want by the end of the call.
Why you should absolutely ask for a credit line increase
As Ramit says, “Credit has a far greater impact on your finances than saving a few dollars a day on a cup of coffee.” But it might not be entirely what you think (if what you were thinking was going on a shopping spree and using your limit more like a target).
Well managed credit boosts your credit score
If you find that you’re pushing beyond that 30% usage of your credit card, it might be a good idea to increase your credit card limit. This means that you remain within that 30% margin, which helps push up your credit score. Request a credit line that will allow you to comfortably remain within a safe margin. Failing to do so might cause you to use a higher percentage of your credit card, which can lead to a drop in your credit score. And it’s a downward spiral from here, my friend. If you want to know more, check out our article on how to improve your credit score.
Higher scores translate to better deals
If you have a perfect, can’t-touch-this credit score as the goal of your credit card line increase, then you’re in for a treat. Better credit scores mean better access to exclusive credit card offers. Think platinum, invite-only, reserve, elite. Need we say more? Plus, if your credit card issuers work on a variable APR, your credit score will count in your favor for a lower APR. Not just for your credit card, but other credit products too.
Your cash flow is in your hands
A credit card is a very short-term bridge between the purchase of an item and when your income comes in. Higher credit limits will provide you with that extra cash flow, as long as you remember not to use it like a safety net (that’s what emergency savings are for).
When you should say NO
A credit limit needs to serve you. The moment a higher limit causes nervous night sweats and clammy palms, it’s time to pull the plug.
- You’re investing. Don’t use loans to fund investments
- The credit line increase is unaffordable
- You are at the peak of credit score heaven
- Another credit company is about to get your business
- You’ve recently applied for credit
A credit line increase is about more than pushing the boundaries of credit limits. It’s about implementing a strategy that will allow you to tap into the full potential of having a credit card. A credit card should:
- Be a tool to improve your credit score
- Help you reach your personal finance goals
- Create opportunities through buying power
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The dos and donts of buying a car
When you start your car buying journey, be sure to keep in mind my four dos and don’ts about buying a car:
DO buy for the long haul
A lot of people want to prioritize how a car looks over anything else. What color is it going to be? Two-door or four? Can a spoiler be too big?
But you should really prioritize getting a good, reliable car that youll be able to drive around for at least 10 years.
Why? Cars are a long-term investment. This isnt like a pair of shoes youre going to wear for a year or two before getting a new pair. A car costs a HUGE amount of money. Youre going to want to get one that lasts a while since its only going to get worse and less valuable over time.
Heres a complicated graph explaining this.
DO find deals for graduates
Plenty of dealerships have great programs for recent grads looking for new cars. These often come in the form of rebates or specialty financing.
Two ways to find these deals:
- Google it. This should really be the first step to anything. Do a simple Google search for recent-graduate car incentive program. Actually, Ill just do it for you. Youll also want to specify your city to see your local deals.
- Ask the dealer. When youre negotiating with your dealership, be sure to ask them what they offer in the way of new graduate car incentives.
DONT think you need a used car
Buying used isnt the only way to save money on a car. Over the long term, a new car might actually end up saving you money if you:
- Pick the right new car
- Negotiate a low price
- Drive it for a long time
Id rather you get a new car thats reliable than purchasing a used car thatll break down sooner.
DONT break from your budget
Set a realistic goal budget for your car and dont go over it. Other expenses will come up maybe car related, maybe not. You dont want to end up struggling because you cant afford your monthly car payment.
You dont have to worry about stretching, though, if you have one thing in place: A Conscious Spending Plan.
How to save money for a car
You can make sure you have even more money to get the car of your dreams by implementing a Conscious Spending Plan.
The typical way people look at saving money for a big purchase like a car typically goes like this:
- Step 1: Stop purchasing the things we love like lattes to save money.
- Step 2: Spend money anyway on other things.
- Step 3: Go back to buying lattes.
- Step 4: Feel bad. Repeat first step.
Thats where the Conscious Spending Plan comes in. This is the exact same system my friend has used to spend five grand a year on shoes.
I can feel your eye-rolling judgement through the computer screen now. How can anyone in their right mind spend so much on shoes each year?
Well consider this:
- She makes a healthy salary.
- She doesnt spend much on other things.
- She has a system in place that allows her to know exactly how much she can spend each month.
But most importantly: She just LOVES shoes.
And her system allows her to buy 10 to 15 pairs of shoes each month each of them costing around $300 – $500 a pair.
After investing in her 401k and paying off her fixed monthly payments like rent and utilities, why wouldnt she use her money to buy the things she loves?
You can use the same system to buy a car. Imagine being able to walk into the dealer and driving off the lot in the car of your dreams, resting easy in the fact that you were able to pay for it.
Thats why I want to offer you a free chapter of my New York Times best-selling book “I Will Teach You To Be Rich.”
In it, youll find the exact system you can use thatll help you both earn more money and start saving for an awesome car.
Enter your information below and get the chapter for free today.