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Should I Apply for a New Credit Card or Ask for a Credit Limit Increase?

October 23, 2013
Credit Card Basics, Credit Cards, Credit Score
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I have a few questions. I have three credit cards with not very high limits. Is it better to apply for new credit, or ask them to raise my limit?  Is there a specific utilization ratio I should have the card down to before I ask for an increase?

It is extremely hard to set and stick to a budget. Are there any budget apps available that you would recommend? Are there any that exist where you can link your bills to?

I recently purchased my first home, and I’m considering purchasing a membership to a discount club. Are those memberships worth it?

-S

Hi S,

I think you’re better off asking for a credit limit increase, and then applying for a new account. I’d aim for as low a debt utilization ratio as possible, so you should ask and apply just after you’ve paid off your credit card bills.

Personally, I’m a fan of Mint. You can define budgets for various spending categories, down to restaurants and clothing stores, and you can get text or email alerts if you go over budget. I’ve found it useful in tracking my spending over time and trying to find ways to cut down.

And as for discount warehouses, the consensus seems to be that Costco is worth it for packaged goods, sports equipment, and pretty much anything you buy in bulk. But I’m a fan of Amazon Subscribe & Save for non-perishable and packaged goods. Subscribe & Save delivers to your home for free, and you can get 15% off your whole order when you get five or more items delivered. I tend to prefer AS&S because it’s more convenient and doesn’t have a membership fee.

» MORE: When should I ask for a credit limit increase?