Well, as long as you don't overwater it, and you use some kind of mix that is well-aerated and perhaps a bit on the "gritty" side, I don't see any problem with potting it up to something bigger, even quite a bit bigger. They are tough critters, I've tried to kill mine multiple times by freezing, drying, etc., and it just thrives.

Repot it right this second! I've never left a potted palm in their original container for more than a couple of days. If it's rootbound, it definitely needs to go in a much larger pot no matter the time of year. I don't care about what anybody says about palms liking to be rootbound. I don't know of any plant that can possibly stay healthy in a pot with no soil! Watering once a day is unhealthy. That's something only nurseries do, or in climates that are hot with fast draining sandy soil. If it's in a 1 gallon pot, put it in at least a 3-5, if it's in a 3, put it in at least a 7, if it's in a 5, put it in a 15 ASAP.

Just make sure you don't disturb the roots! Most palms don't tolerate root disturbance.

I disagree about root disturbance- after this amount of time you likely have severely circled roots and you will need to prune a few to get things straightened out.
I have done this many, many times and have even transported large palms bareroot. As long as you keep them moist and shaded during the process (and a few days after) it can be a most beneficial thing to do.

Definitely repot! I had mine in its nursury pot for about a year and then in 2010 I planted it in the ground. It gets damaged even with protection, but recovers very fast and looks healthier than in a pot! They are slow growing and dont get very tall for many years in full sun.
-Alex