Do you need more credit for one or several of your expensive purchases? Believe it or not, you are not alone! Here in this article, we will share with you everything you need to know on how to increase your credit card limit in Singapore. We will also look at the maximum credit card limits set out by MAS regulations.
But, first and foremost, what is a credit limit? The credit limit is the maximum amount of money that an individual can borrow on their line of credit account from their bank or the financial institution (credit cards). The interest rates for these accounts typically depend on the borrower’s ability to repay any loans taken up and how much they have borrowed already. If someone is unable to pay back what they owe, they may be charged penalties, including higher interest rates for the credit card, having their bank account frozen, or even getting declared bankrupt.
Credit limits are set by the bank or financial institution that you have an account with and are typically based on your income, expenses, and what you have already borrowed. As a rule of thumb, MAS regulations suggest that your total credit limit should not exceed 30% of your monthly income.
So, how do you increase your credit limits? How much is left in your credit card account? If a person uses a large amount of money from their current credit limit and does not have enough to pay for future purchases they want to make, it could be time to consider increasing their limit on their line of credit account.
Maximum Credit Limit Allowed In Singapore
Credit limitations are determined by a variety of factors, including your age, income, and credit history. Apart from that, credit card restrictions must adhere to the Monetary Authority of Singapore’s laws (MAS).
The following are the strict regulations for people under the age of 55:
|Annual income||Regulatory credit limit|
|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 (or net personal assets of at least S$2 million, |
or net financial assets of at least S$1 million)
|No regulatory limit|
For individuals above 55 years of age:
|Net personal assets||Annual income||Regulatory credit limit|
|S$750,000 to S$2m||≤S$15,000||Up to S$2,500|
|S$750,000 to S$2m||S$15,000 to S$30,000||Up to 2 months’ income|
|S$750,000 to S$2m||S$30,000 to S$120,000||Up to 4 months’ income|
|S$750,000 to S$2m||S$120,000||No regulatory limit|
|Above S$2m||Any||No regulatory limit|
According to MAS regulations, individuals seeking an unsecured loan should not borrow more than 30% of their monthly income. For example, if your income (monthly) is S$5,000 a month, then you cannot apply for a loan above S$1,500. So, in this case, an individual would have to decrease their credit card limit by S$1,500 before applying for the unsecured loans.
Why is my credit card limit less than the amount set by the MAS?
Do you have a credit card limit that is less than the MAS amount? This is normal because the MAS rules set a ceiling rather than a minimum. It is important to check the terms and conditions of your credit card agreement- while your credit card limit might be lower than the MAS guidelines, it’s possible that your credit limit could be higher.
It’s also vital to recognize that banks and regulated money lenders can provide you with any lower credit limit after analyzing your risk profile. If you have a history of going overboard with your spending, a reduced credit limit may discourage you from doing so.
How Can I Increase My Credit Limit?
Many people believe that once they’ve hit their credit limit, there’s nothing they can do. We understand how aggravating this can be, especially if you require additional funds to cover unforeseen bills or invest in new opportunities. But don’t be concerned! Other than applying for a new line of credit, there are a few solutions available. Let’s have a look at the options that could be able to help you raise your credit limit.
1. Make Your Payments On-time
In order to get a higher credit limit, it is important to make your payments on time. The bank and financial institution will recognize that you are a responsible and low-risk borrower. If you are able to show that you can handle your credit card responsibly, then there is a good chance that they will consider increasing your credit card limit.
By using your credit card more frequently, you are demonstrating that you are financially responsible. This type of behavior is favored by credit card providers, who may increase your credit limit or offer you more favorable terms.
2. Demonstrate that you have the financial means to take out more credit.
It’s important that you don’t go overboard with this- banks will not look favorably upon customers who ask for an excessive amount of money just because they feel like it. If you’re asking for a large sum of money, then make sure that you can provide documentation and information as to why you need such a high limit.
For example, give them details about your upcoming expenses or credit card debt so they can understand where their loan is going. Do remember, though, if the bank rejects your request for additional funds, don’t try again. Instead, focus on how you can improve your current repayment behavior.
Another way to increase the credit limit on your credit card is that you will need to show that you have an increase in your income. To do this, you will need to submit the latest documents such as payslips and income tax notices. Your credit card company may also require you to purchase life insurance or home/auto insurance if you are not holding any of these policies.
Once you submit these documents, the bank or financial institution will know that you are able to make larger payments with your credit card. You can expect them to give you a higher credit limit as a result.
3. Obtain a credit card with a higher credit limit.
Applying for a card with a larger limit may be one approach to improve your habits if you are qualified. This can be beneficial for a variety of reasons. Above all, keep in mind the advantages of having more spending power on your own terms.
Another reason credit limits might not seem like an issue is that it seems like they don’t really affect you right now. This is because credit limits are not always something that people think about. For example, you may not have the ability to afford new school attire or even to purchase school supplies at all. This is even more problematic considering the benefits you could be missing out on by not having more spending power on your account.
Your credit utilization ratio should ideally be kept below 20% to maintain a decent credit score. Maintaining a utilization rate of less than 20% reduces the chances of a default.
Things to Think About Before Increasing Your Credit Limit
Getting a credit limit increase may seem appealing, but it could put you at risk of accruing even more debt. Applying for a raise may have a negative impact on your credit report. Consider the following factors before deciding to increase your credit limit:
1. How Much do you Spend?
Credit limits can help you in a variety of ways. Some of these include larger spending power and the ability to make large purchases without worrying about maxing out your credit limit. Using your credit card for spending can qualify you for certain discounts and perks in some cases.
2. What Is Your Credit History Like?
The credit limit you currently have might not be based on your credit history. This means that you could potentially be given a higher credit limit than what you actually deserve. The total amount of debt and the number of past due payments would affect this. It is worth noting that your credit score is also considered when determining your total amount of available credit.
3. Are You Responsible to Handle A Higher Credit Limit?
Lastly, you need to consider how disciplined you are when it comes to spending. If you are not responsible enough with your finances, you might be better off with a smaller credit limit.
You should consider the potential risks involved when applying to increase your credit limits. On the one hand, a higher credit limit would allow you to make large purchases without worrying about maxing out your card. However, it could also lead to an increased amount of debt in the future if you are not able to handle it responsibly.
If you are sure enough that you can be responsible for your credit limit, you might want to consider accepting the increase in order to take advantage of the benefits.