Your credit card issuer may sound like a curious friend when they ask you how much money you make. But these requests to update your income, which usually appear when you log into the app or website, are designed to keep you from taking on more debt than you can afford.

“From the early to mid-2000s, credit card issuers were issuing cards based on their credit score and nothing more,” says Chi Chi Wu, an attorney at the National Consumer Law Center. “Consumers would get into trouble and open accounts even if they couldn’t afford to take on more debt.”

This is one of the reasons, says Wu, that the Credit Cards Act 2009 included the requirement that credit card issuers verify consumers’ ability to pay. As a result, issuers began to ask more aggressive income questions. While they usually need this information the first time a card is issued, they also regularly ask cardholders to voluntarily update their income. A reported increase in income could result in a increase in credit limit.

“The goal is to keep consumers out of harm’s way,” says John Grund, general manager of payments practice at Accenture, a company that provides advisory services to banks and payment service providers.

Yet a request for an income update can be troubling for consumers who prefer to protect their privacy and are unsure of why they are being asked to reveal something that many consider private. “It can be difficult to enter your income into the computer,” Grund admits.

Before you decide to update your income the next time your card issuer asks you to, here’s what you need to know.

Answering your issuer’s question can be beneficial to you. But “there is no negative repercussions in not providing income updates,” said Kevin Morrison, senior analyst in the retail banking and payments team at Aite Group, a financial research firm. financial services. He adds that he never provided an update when asked.

In fact, Wu notes, because responding that your income has increased might cause your credit limit to increase that you don’t want, some consumers might be better off withholding this information. “Increasing your line of credit might sound good in theory, but it can also be risky, especially if you’re struggling to manage your debt,” she says.

“If you want to increase your credit limit, tell them [your new income]Says Ron Shevlin, research director at Cornerstone Advisors, a banking consultancy firm. Card issuers also take other factors into account, he says, such as the payment history on the card. He adds that you can provide individual or family income; using household income gives you a better chance of getting a credit limit increase because it is usually higher.

While large fluctuations or aberrations can raise red flags, card issuers do not take steps to validate self-reported income with pay stubs or W-2s, says Tom Dailey, expert and consultant at the credit card industry.

Still, he cautions that lying can be problematic. While you probably won’t get sued for it, Dailey says it could hurt you if you find yourself in default and try to work out a payment plan with your card issuer. “If they set a credit limit based on inflated numbers, they will be less willing to do it,” he says.

“If the bank has more information about you, they will suggest products that are better suited for you,” says Grund. If your card issuer increases your credit limit based on your new income number, that increase could also lead to other offers, such as other credit cards, car loans, or credit management services. private heritage. “You might end up receiving offers that you wouldn’t have received otherwise,” he adds.

Depends on cardholder agreement, card issuers may share the revenue information you provide within the company with other departments as well as third parties. “You should have known about it at some point; that’s why you get privacy notices in the mail, ”Wu says.