Using your credit card to meet financial needs, thoughts of expanding their limits might strike the users. For those determined to give in to their thought and take appropriate action for the same, the need is to learn how to have the limits increased. For the ones struggling with the option to increase the limit or not, we have something for you, too. Before having a glance at the article, perform a free cibil score check using the Cibil Score app, as it plays a prime role in determining your credit card limit.
What is a Credit Card Limit?
Simply interpretable with the name, the credit card limit is the limit set on expenditures using the credit card. So, it is the maximum amount of expenditure possible using a credit card. It is in terms of monetary value. Different factors determine the limit. Knowledge of the same can help you with thorough understanding. Hence, the factors are:
- Credit score
- Credit history
- Annual income
- Current debts
- Employment status
- Amount of credits
Benefits of Increasing Credit Card Limit
For individuals struggling with whether to increase their credit card limit or not, here are a few reasons why you should. Ensure making a balanced consideration of positives and negatives for unbiased decisions:
- It eases and increases the possibility of getting loans if the increased limit is handled carefully.
- Builds trust of banks on your financial capabilities
- The increase lowers the credit utilization ratio, which subsequently improves the credit score
- It is the preferred and important source of help during financial crises and emergencies
- Offers different perks such as hotel memberships, lounge access, and much more depending on the bank and card of choice
Methods to Increase Credit Card Limit
With the final decision in your mind by now, it is the right time to be aware of the methods to increase the credit card limit. Here is how you can opt for the facility:
Enhance the Card Usage
Proper and regular utilization of the credit card without falling into the cycle of debt is one of the most appropriate recommended methods to increase the credit card limit. Based on the transaction history, the bank itself will offer the option to meet your increased demand.
Focus on Credit History
A well-maintained credit history includes conscious choices on expenditures and paybacks. The bank uses it to determine credit limits. The credit history can be improved through regular expenditures such as debt management, timely bill payments, and avoiding expenditures by completely utilizing the existing credit.
Raise the Request
The banks will offer the increase in credit limits on request. Ensure your reason is agreeable to the bank. The option is nowadays available through online banking access rather than requiring a physical visit. One of the common reasons can be increased income, proved through the payslips displaying increased income. Alternatively, low credit card utilization can also be an appropriate reason.
Application For a New Card
If you want to keep the current credit card limit unchanged, applying for a new card is another option. The option will be readily approved and feasible in case of a good credit score and credit history. To have a free cibil score check, make use of the cibil score app.
Look For an Annual Increase
The banks also offer credit cards with the possibility of an annual increase in credit limit. Seek the presence of this option in your card and utilize the feature if available. If you are looking to apply for a new credit card limit, look out for the presence of such an option in your new choice. Also, perform a free cibil score check using the cibil score app to have practical expectations on the possibility of an increase. The facility may or may not be limited based on the poor credit score or history, if present.
Lower Credit Utilisation Ratio
Keeping the credit utilization ratio has a beneficial impact on your decision to increase the credit card limit. With the recommended ratio being 30%, here is how it contributes to the decision. The low utilization indicates your efficient spending habits, which do not let you borrow money through a credit card. It makes you an efficient spender and, hence, trustworthy enough. Additionally, it has an important effect on the credit score. You can perform a free cibil score check using the cibil score app.
Credit cards have become an important need, serving as a closer friend in times of financial need. With the limitation being set by the credit card limit, it is decided based upon multiple factors, including cibil score and credit history. Besides making use of the determining factors and improving the same, there are multiple other methods to increase the credit card limit. With all of them enlisted above in the article, it is advisable to have practical implications for the decision you head forward with.
FAQs on Credit Card Limit
Q1. What is the difference between the total credit limit and the available credit limit?
The total credit limit refers to the maximum allowed limit, while the available credit limit is the one remaining for purchase.
Q2. Why should I not use 100% of my credit card limit?
It is not recommended to utilize the 100% credit card limit due to the negative impact on the credit score, possibility of entering debt, chances of ending up with interest, and leading to limited future borrowing options.
Q3. Is the credit card limit monthly or annually?
The credit card limit is available monthly as per the billing cycle.
Q4. Which banks offer credit cards?
Multiple banks offer credit cards. You can go with any of the options, such as ICICI, SBI, Citibank, HDFC, Axis Bank and many others.