Dear Creditnet: I have good credit scores and plan to apply for a new cash back credit card sometime this month. I've already chosen the card I want, but how can I get a feel for what kind of credit limit I'll receive? I'm worried about canceling my old card if my new credit limit won't be high enough to support my regular spending habits. So is there any way to find out what credit limit I'll get beforehand, or is it always a shot in the dark?
Answer: Wouldn't it be nice to have that kind of information available before you complete the application? Unfortunately, it's impossible to know exactly what kind of credit limit you'll be given before you apply for a credit card. There are just too many factors at play to know for sure. This can especially be a problem for consumers who are applying for 0% interest credit cards because they intend to transfer high-interest balances and pay them off during the 0% promotional period. You obviously don't want to apply for a card, get approved, and then find out that your credit limit isn't even high enough to make the balance transfer without wrecking your credit utilization ratio and hurting your FICO Scores.
While there's no way to know for sure what credit limit you'll receive, you can at least try to make an educated guess. First, take a look at what credit limits you have for all your current credit cards. If you have good credit, decent income, and several cards with limits above $5,000, then there's a good chance your new credit issuer might offer a similar limit.
On the other hand, if you have one credit card with a $500 credit limit, don't expect to get a new card with a high credit limit. It's just not going to happen, even if your credit is great— especially these days when credit issuers tend to be more stingy with the credit limits they offer. In fact, take a conservative approach when looking at your current credit limits and assume that the new credit limit you'll receive may very well be lower. Finally, there's no reason to close your current card before applying for the new one.
Leave it open instead, and make sure that you're approved for the new credit card before deciding what to do with your one. And if it has no annual fee, you may even want to consider leaving it open for as long as possible to preserve the available credit and history associated with the card.