Personal Finance

** TD Credit Card increase offer. Don't know what to do! **

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  • Apr 20th, 2012 10:54 am
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Newbie
Apr 18, 2012
8 posts
NORTH YORK

** TD Credit Card increase offer. Don't know what to do! **

Hey everyone,

I hope somebody can help me on the following situation:

TD bank has offered me a credit card limit increase of $4,000, valid until 1 May. My current limit is $1,000 and I'm their customer for almost two years. I have no late payments, no other credit cards and also a very good credit score.

My goal is to build credit over time. I'm new in Canada (2 years) and want to start my own small business in the near future.

I would like to know whether I should accept the limit increase to $5,000 or get another credit card instead with a different financial institution, e.g. CIBC, BMO, PC Financial (all Master Card) or maybe others. I really don't need a $5,000 limit. A max. $3,000 limit would work for me.

Also, my bank has added an overdraft of $500 to my checking account by themselves (I didn't ask for it).

--> Does a higher credit card limit build my credit score up?
--> Will another credit card build my score up?
--> Should I accept the offer from TD?

I hope the information given is sufficient. Looking forward for your replies and suggestions.
Thx.
15 replies
Newbie
Dec 16, 2007
31 posts
30 upvotes
ottawa
Accept the increase, it will improve your credit score since your credit to debt ratio will be smaller.
Member
Apr 12, 2006
414 posts
96 upvotes
harbor81 wrote: Accept the increase, it will improve your credit score since your credit to debt ratio will be smaller.

+1

It'll help reduce your TDS ratio.
Deal Addict
User avatar
Mar 23, 2011
2207 posts
1398 upvotes
Etobicoke
Accept it, as long as you don't abuse it, a high limit isn't a bad thing.
-----------------------------------------------------

"It's better to be dead and cool...than alive and uncool!"
Banned
User avatar
Feb 15, 2008
26318 posts
3242 upvotes
Calgary
I agree, accept it, although that doesn't mean that you should ever really use the card for anything but extremely short term (ie: until your bill comes due) credit.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Member
Jun 22, 2006
291 posts
22 upvotes
Vancouver
Blue_Thunder13 wrote: +1

It'll help reduce your TDS ratio.

Just wondering how it reduces the TDS ratio. The formula in TDS doesn't have credit limit.
Deal Fanatic
Aug 31, 2010
7556 posts
6834 upvotes
Doesn't affect TDS. It affects credit to debt ratio.

Accept the increase as they've already done a soft hit on your credit. Going to a different FI will warrant a hard hit that you don't need (as you've already had the soft hit+accepted).

edit: Keep in mind you've been approved for $4,000. That means you can accept anything less than that, in certain increments. E.g you could accept a $1,000, $2,500, $3,000 increase if you so desire. I would accept the maximum if you are certain you will not abuse the extra credit being extended to you.
Member
Apr 12, 2006
414 posts
96 upvotes
compass wrote: Just wondering how it reduces the TDS ratio. The formula in TDS doesn't have credit limit.

Oops sorry I stand corrected. I meant credit to debt ratio. :facepalm:
Newbie
Apr 18, 2012
8 posts
NORTH YORK
Thx everybody for your replies.

I did a quick search on the net about "debt to credit ratios" and came with this conclusion:

1. a lower debt to credit ratio is favorable
2. the bigger one's available credit is, the lower the debt to credit ratio is (assuming the debt load is the same)
3. if you can keep your debt load (the debt part of the debt/credit ratio) under the 50% mark, the better off you will be in the long run; and below 35% (what banks want to see) is even better!

This means:
if I can keep my debt under $1,750 ($5,000x35%) every month, I will benefit more than choosing a $3,000 credit limit ($3,000x35%=$1,050)

Is that correct or am I missing something here?

-again thx for all your replies.
Deal Expert
User avatar
Nov 15, 2004
21786 posts
4903 upvotes
Toronto
pejmanpar wrote: Also, my bank has added an overdraft of $500 to my checking account by themselves (I didn't ask for it).

You might want to look into this, because I'm pretty sure they need your permission. Some rep might just be adding things to your file to boost their numbers.
Deal Fanatic
Aug 31, 2010
7556 posts
6834 upvotes
pejmanpar wrote: This means:
if I can keep my debt under $1,750 ($5,000x35%) every month, I will benefit more than choosing a $3,000 credit limit ($3,000x35%=$1,050)

Is that correct or am I missing something here?

-again thx for all your replies.

You got it. Just make sure you can control your spending ;)
Newbie
Apr 18, 2012
8 posts
NORTH YORK
hvc wrote: You got it. Just make sure you can control your spending ;)

Great! with your help I got it... lol

-Do I have to change my TD credit card after increasing my limit to $5,000 ?
-In general, when should someone change their credit card(s) at all?
Deal Fanatic
Aug 31, 2010
7556 posts
6834 upvotes
pejmanpar wrote: Great! with your help I got it... lol

-Do I have to change my TD credit card after increasing my limit to $5,000 ?
-In general, when should someone change their credit card(s) at all?

You don't need to change it. At $5,000 you open the options for their First Class, and a few other Visa's. Some of them carry fees, however. I would recommend the Gold Select for a free rewards card.

No need to change them at all. I recommend keeping credit cards open forever and not both closing them, especially if it was your first card (and a large time gap from card 1 opening to card 2 opening) and carries a good history.
Deal Expert
Aug 2, 2001
18946 posts
10527 upvotes
pejmanpar wrote: -Do I have to change my TD credit card after increasing my limit to $5,000 ?
No, it's the same physical card.
-In general, when should someone change their credit card(s) at all?

On RFD most people change their credit cards for promotional offers. You can often get a cash bonus for signing up for a credit card, so people sign up for it then cancel once they get the bonus. Other credit cards offer low balance transfer rates, so you can borrow $10,000 for 1.9% (or whatever their promo rate is).

For average, everyday people I suspect they change credit cards when:
- They change banks
- They accept store credit cards because of a promo offer (discount, no payments for 6 months, etc)
- Their banks offers them new cards (such as being offered a cash-back card from your bank when you only have a typical credit card with no cash back).
Jr. Member
Nov 28, 2010
171 posts
39 upvotes
pejmanpar wrote: Hey everyone,

I hope somebody can help me on the following situation:

TD bank has offered me a credit card limit increase of $4,000, valid until 1 May. My current limit is $1,000 and I'm their customer for almost two years. I have no late payments, no other credit cards and also a very good credit score.

My goal is to build credit over time. I'm new in Canada (2 years) and want to start my own small business in the near future.

I would like to know whether I should accept the limit increase to $5,000 or get another credit card instead with a different financial institution, e.g. CIBC, BMO, PC Financial (all Master Card) or maybe others. I really don't need a $5,000 limit. A max. $3,000 limit would work for me.

Also, my bank has added an overdraft of $500 to my checking account by themselves (I didn't ask for it).

--> Does a higher credit card limit build my credit score up?
--> Will another credit card build my score up?
--> Should I accept the offer from TD?

I hope the information given is sufficient. Looking forward for your replies and suggestions.
Thx.

Hey @pejmanpar it's Sarah from TD. We'd love to connect with you to discuss options. To learn more about our cards, check out http://bit.ly/xnS1J2 & give us a call to chat. Look forward to hearing from you soon!

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