I recently applied for an exciting welcome offer Citi® / AAdvantage® Executive World Elite Mastercard® (see rates and fees) I was excited when I was approved.
But when Citi only gives me a small credit limit and it’s difficult to meet the minimum spending requirements on time, I can ask for a reallocation of credit from my other Citi cards to increase the limit on my new card.
Here’s why it’s important, and what you need to know if you want to reallocate your credit limit among your various credit cards.
Approved, but with a smaller credit limit
My credit score is high, so when I open a new credit card, I usually receive a large new line of credit—sometimes well over $20,000.
However, I currently have about 20 open cards (I recently had to pay for a wedding, so I opened a few new accounts to earn the welcome bonus). This means that some issuers have extended to me all or nearly all of the credit line they are willing to extend to me for the time being.
When this happens, not only does it make it more difficult to get a new credit card from your card issuer, but if you yes If you get approved for a new card, you may only be able to get a small credit limit because the bank doesn’t want you to take on more financial risk.
You’ll find that while some banks limit the number of open cards they issue you, others treat you more fully as a customer and are willing to extend you a total credit limit, which can vary based on things like your income, the number of open accounts you have, and the number of accounts you hold with the bank.
This credit limit can be spread across all of your open accounts, so you can open multiple credit cards as long as the bank is still willing to extend the credit line to you.
But what if you’ve reached or are close to reaching your credit limit? This is where credit line reallocation comes into play.
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Reallocate credit limit from one card to another
If, like me, you opened a new credit card from a card issuer you already have a relationship with and have other open credit card accounts, you may be able to transfer all or part of your credit limit from your existing card account to the new account.
Reasons why you might want to do this include:
- You want to open a new card, but the bank has already extended you all the credit it’s willing to extend, so you need to withdraw funds from other accounts to get approved.
- You’ll need a larger credit limit to meet the new card’s minimum spending requirements.
- You plan to spend more on your new card than on your existing card, so you’ll need a higher credit limit.
- You’re considering closing your existing card, but want to maintain your overall credit limit with the bank with a new card.
My particular case is a combination of the latter three.
The last scenario is probably the most important, though, because one of the factors that determines your credit score is your overall credit utilization ratio, or how much you spend or have on a card relative to your total credit.
If you close an existing card with a higher credit limit without reassigning it to a new card with a lower credit limit, your spending will appear to be a much higher percentage of your overall credit limit, which in turn may lower your credit score.
However, if you transfer your credit limit to a new account, you’ll keep your credit limit higher and your utilization ratio won’t change much.
On the other hand, the age and history of an account are other important factors in maintaining a positive credit score, so closing old accounts may also temporarily lower your credit score.
A credit line reallocation is not a balance transfer
Although it sounds similar, reallocating a line of credit is not the same as transferring a balance.
When you reallocate your credit limit, you simply transfer your spending power from one card account at one bank to another card account at the same bank.
A balance transfer, on the other hand, occurs when you have a balance on your credit card account and then request to transfer that balance to another credit card account.
People tend to take advantage of 0% APR deals, and you may be able to do this without having to pay interest on your balance for a period of time. It also tends to cost a percentage of the balance you’re transferring, which means it can get expensive if you have a large balance to transfer.
Typically, banks won’t let you transfer a balance from one of their card accounts to another at the same institution – lenders want you to transfer your balance from another bank to them so that they can eventually charge you interest and make money.
Credit line reallocation is not the same as credit line increase
Likewise, reallocating credit from one account to another will not increase your overall credit limit. Instead, it simply transfers the credit you earned from one account to another.
If you do want to increase your overall credit limit, you will need to contact your financial institution and provide information about why you want to do so and supporting details (such as increasing your income) to justify the request.
Call Citi to reallocate my credit line
Some banks have made it easier to reallocate lines of credit, including American Express and Chase, with the latter even starting to offer customers an online self-service option.
While I have reallocated lines of credit several times in the past, including with Citi, Citi seemed to tighten its rules for doing so at one point.
However, don’t believe everything you read. Anyway, I decided to give it a try, so I started calling the number on the back of my new phone. Citi/AAdvantage Executive World Elite Mastercard. I contacted a friendly representative who then directed me to Account Services.
I explained my situation to the second representative and after verifying some financial information, he asked how much credit I wanted reallocated from my other Citi cards and how much.
I have several other Citi cards, but the one I’m interested in transferring some of my credit limit to is the Citi®/AAdvantage® Platinum Select® World Elite Mastercard® because it has a much higher limit than my new card.
Citi / AAdvantage Platinum Select information is independently collected by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
I think I might keep the old card for a while, but carrying both would be a bit repetitive for my needs. Not to mention, the Citi/AAdvantage Executive World Elite Mastercard’s richer benefits mean I’ll probably stick with it from now on.
Therefore, I requested a $10,000 credit limit transfer from the Citi/AAdvantage Platinum Select to the new Citi/AAdvantage Executive card.
The representative noted that this will involve a rigorous credit check and, if approved, the credit limit change will occur within days.
In fact, the inquiry was made on the same day and by the next morning I found that the credit limit for my personal account had been updated accordingly.
Now, I don’t like running hard inquiries on my credit report because it may lower your score a few points, but that’s only temporary. I think it’s worth raising the credit limit on my new card so I can more easily use it for larger expenses.
Related: Earn 90,000 AAdvantage miles with Citi’s new American Airlines card
bottom line
Reallocating credit from one card to another takes some time and research and may involve a hard credit pull, depending on the card issuer.
However, it has some impactful benefits, including letting you adjust your spending based on your new card’s earning rate and other benefits, ensuring you have a certain credit limit that can meet minimum spending requirements and maintaining the majority of your credit with the bank, even if you close one of your card accounts.
In my case, reallocating part of my credit limit with Citi meant I could more easily use my new card to get its popular perks, and I’d have more flexibility to close the old card if needed, since it wouldn’t impact my credit as strongly as if I didn’t.
This is an extraordinary tool that consumers can use to maintain a healthy credit score while maximizing their spending strategy.
To learn more, read our full review of AAdvantage Executive and AAdvantage Platinum Select.
