I recently applied for an exciting welcome offer on the Citi® / AAdvantage® Executive World Elite Mastercard® (see rates and fees) and was thrilled when I was approved.
But when Citi only gave me a small credit limit that would make it difficult to meet the minimum spending requirement on time, I was able to ask for a credit line reallocation from my other Citi cards in order to raise the limit on my new card.
Here’s why that’s important and what you need to know if you want to reallocate credit lines among your own various credit cards.
Approved, but with a small credit line
I have a great credit score, so when I open new credit cards, I typically receive a large new line of credit assigned — sometimes well over $20,000.
However, I currently have around 20 open cards (I recently had a wedding to pay for, so I opened some new accounts to earn welcome bonuses). That means some issuers have extended me either the total or nearly the total amount of credit they are willing to give me for the time being.
When that happens, it not only makes it harder to get a new credit card from an issuer, but if you are approved for a new card, you might only get a small line of credit on it since the bank does not want to take much more of a financial risk on you.
You see, while some banks limit the number of open cards they will issue to you, others look at you more holistically as a customer and are willing to extend you a total amount of credit, which can change with circumstances like your income, the number of open accounts you have and how many accounts you hold with the bank.
That credit limit can be allocated across all your open accounts, so you can open several credit cards as long as the bank is still willing to give you a line of credit.
But what if you’ve reached that credit limit — or nearly have? That’s where credit line reallocation comes in.
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Reallocating a credit line from 1 card to another
If, like me, you open up a new credit card from an issuer you already have a relationship with and have other open credit card accounts, you might be able to shift all or part of the line of credit from an existing card account to your new one.
Among the reasons you might want to do so are:
- You want to open a new card, but the bank has already extended you all the credit it is willing to, so you need to pull from your other accounts in order to get approved.
- You need a larger line of credit in order to meet the minimum spending requirements on a new card.
- You plan to put more spending on your new card than your existing ones going forward and thus need a higher credit limit on it.
- You are considering closing an existing card but want to maintain your overall credit line with the bank with your new card.
My particular situation was a combination of the latter three.
That last one is probably the most important circumstance, though, because one of the factors used to determine your credit score is your overall credit utilization, or how much you are spending on your cards or carrying as a balance versus your overall amount of credit.
If you closed an existing card with a high credit limit without reallocating it to a new card with a lower limit, it would look like your spending is a much higher proportion of your overall credit limit, and that could, in turn, drive down your credit score.
However, if you shift your credit line to your new account, you maintain that higher line of credit and your utilization should not change that much.
On the flip side, the age and history of your accounts are other important factors toward maintaining a positive credit score, so closing an older account could also nudge your credit score lower temporarily.
Credit line reallocation is not a balance transfer
Although they sound similar, reallocating a line of credit is not the same as transferring a balance.
When you reallocate a line of credit, you are simply shifting your spending power from one card account with a bank to another card account with the same bank.
A balance transfer, on the other hand, occurs when you carry a balance on your credit card account and then request to transfer that balance to another credit card account.
Folks tend to take advantage of 0% annual percentage rate offers, where you might not have to pay interest on a balance for a set period of time, in order to do this. It also tends to cost a certain percentage of the balance you are transferring, meaning it could get expensive if you have a large balance to transfer.
Typically, banks will not allow you to transfer a balance from one card account with them to another with the same institution — lenders want you to transfer your balance to them from another bank so that they can eventually charge you interest on it and make money.
Credit line reallocation is not the same as a credit limit increase
Likewise, reallocating credit from one account to another does not increase your overall line of credit. Rather, it simply transfers the credit you are being afforded from one account to another.
If you do want to raise your overall credit limit, you will need to contact your financial institution and provide information about why you want to do so with supporting details, such as an increase in your income, in order to justify the request.
Calling Citi to reallocate my credit line
Some banks have made it easy to reallocate lines of credit, including American Express and Chase, the latter of which has even started offering an online self-service option for customers.
While I have reallocated lines of credit several times in the past, including with Citi, it appears that, for a time, Citi tightened its rules around doing so.
Don’t believe everything you read, though. I decided to try anyway, and so I started by calling the phone number on the back of my new Citi / AAdvantage Executive World Elite Mastercard. I connected with a friendly representative who then transferred me to the account services department.
I explained my situation to the second representative and, after verifying some financial information, he asked me which of my other Citi cards I would like to reallocate credit from and in what amount.
I have a few other Citi cards, but the one I was interested in moving some of my credit line from was the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® since the limit on it was much, much higher than that of my new card.
The information for the Citi / AAdvantage Platinum Select has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
I figure I might keep the older card for a while, but carrying both is a bit duplicative for my needs. Not to mention, the richer benefits of the Citi / AAdvantage Executive World Elite Mastercard mean that I’ll probably move forward with it from now on.
So, I requested to move $10,000 in credit from the Citi / AAdvantage Platinum Select over to the new Citi / AAdvantage Executive card.
The representative noted that this would involve a hard credit inquiry and that, if approved, the credit line change should happen within a few days.
In reality, the inquiry happened that same day, and by the following morning, I noticed that the credit lines on the individual accounts had been updated accordingly.
Now, I didn’t love having a hard inquiry on my credit report since that can lower your score by several points, but that is only temporary. I figured it was worth raising the credit limit of my new card so that I would have an easier time using it for large expenses.
Related: Earn 90,000 AAdvantage miles with this offer on Citi’s new American Airlines card
Bottom line
Reallocating a line of credit from one card to another takes some time and research and can involve a hard credit pull, depending on the issuer.
However, it has some impactful benefits, which include letting you adjust your spending to newer cards based on their earning rates and other benefits, ensuring you have a line of credit that lets you meet minimum spending requirements and maintain the majority of your credit with a bank, even if you close one of your card accounts.
In my case, reallocating part of my credit line with Citi meant I could use my new card more easily to earn its welcome offer and that I have more flexibility to close an older card when I want, since it won’t impact my credit as strongly as it might have without doing so.
It’s an extraordinary tool consumers can use to keep their credit score healthy while maximizing their spending strategy.
To learn more, read our full reviews of the AAdvantage Executive and the AAdvantage Platinum Select.