Credit cards have become an essential aspect of many people’s lives these days. One of the realities that individuals must face is the presence of a credit card limit. As you are probably aware, you cannot use your Credit Card indefinitely. You are not permitted to spend more than the credit card limit.
The Credit Card limit is determined by a number of factors; it can differ from card to card and even from person to person. The bank sets the limit based on their assessment of your capacity to pay. Some of the things they consider include your income – the bigger your income, the larger your Credit Card limit. Another factor they consider is your credit score, which is based on your track record of debt payback. The higher your credit score, the larger your credit limit.
Credit card use is becoming more popular these days. Customers with credit cards and a strong CIBIL, or credit score, will also receive calls from the bank to boost their credit limit.
Factors Involved In Deciding The Credit Card Limit
Before choosing a credit card limit, your income must be evaluated first. Your credit card limit grows in direct proportion to your income.
2. Credit Score
A better credit score means a larger credit limit.
3. Credit Utilisation Ratio (CUR)
According to the CUR, if your credit card limit is up to Rs 2 lakh and you have spent Rs 20,000, your CUR is 10%. Explain that a CUR of less than 30% indicates that your credit management is improving. You may, however, raise your credit limit to keep your CUR low.
How to Raise Your Credit Card Limit
1. You can ask the bank to increase the credit card limit. However, it is dependent on a variety of criteria, including your credit history, credit score, and income.
2. If your income rises, you can increase your credit limit by notifying the bank.
3. Depending on how well you use your credit card, banks may offer to boost your credit card limit.
4. In rare situations, if your credit score passes the bank’s guidelines, the bank may boost the credit card limit.
Advantages Of Increasing Credit Card Limits
1. Improved loans
Raising your credit limit helps your credit score. With a good credit score, the bank is far more likely to grant you loans. This allows you to better manage your expenses in the long term and helps you get good discounts on consumer, house, vehicle, personal, or school loans later in life.
2. Enhanced Liquidity
The higher the limit, the more money you have at your disposal. As a result, you may easily plan large costs such as gadgets, furniture, travel, and more using your credit card. A bigger credit card limit eliminates the need to postpone purchases.
3. Better Benefits
A large credit limit might also provide you access to more credit card options at some institutions. Upgrades to credit cards can also come with opulent amenities like airport lounge access, railway lounge access, spa and golf discounts, and more.