Having a credit card is one of best way to save money and manage your finances. Depending on your income and credit score, your credit card issuer sets a limit on your online credit card that enables you to pay for your purchase whenever required. You are required to make repayments within the stipulated time, or else you incur higher interest rates. One of the important features of a credit card is a credit card limit.
Credit Card limit
The credit card limit is the total amount that you are allowed for your credit card usage. It is the total usage limit set by your credit card issuer on a particular card. For instance, if your bank or credit card issuer has set a limit of Rs. 100,000 on your credit card usage, which means that you can’t use your credit card to make purchases that cost more than that amount.
Your credit card limit depends on the type of credit card you are using and your eligibility. If you have a stable source of income with a higher credit score, you can get a higher limit based on your needs.
How to boost your credit card limit?
If your credit card limit is not enough to support your requirements, then you can increase your credit limit. Here are some of the ways to boost your credit card limit:
-
Increase your credit score
Your credit score is one of the crucial parameters considered by a lender to determine your credit card limit. It indicates whether or not you can repay the borrowed amount on time. It ranges between 300 and 900, and it determines your creditworthiness. If you have not defaulted on your previous credit card payments, it would be easy for you to get a higher credit card limit.
Therefore, before applying for a higher credit limit, it would be wise to improve your credit score using your credit card. Make sure to pay your monthly bills on time and maintain a minimum CIBIL score of 750. However, the closer you are to the 900 range, the higher your chances of getting a higher credit card limit.
-
Avoid late payments
One of the crucial steps you can take towards increasing your credit limit is paying off your credit dues timely. If you have pending dues on your credit card from last month, make sure to clear off that due first. Next, pay off your future credit card bills in full before the due date. When you make on-time repayments, you are proving that you are a credible and responsible borrower. In such cases, the credit bureau increases your credit score, and in turn, you can avail of a higher credit limit on your credit card. Therefore, it is imperative to avoid late payments if you wish to get a maximum credit limit.
-
Consider your credit utilization ratio
The credit utilization ratio is the ratio of the credit utilised against the maximum limit offered to you. In other words, it is the amount of money you owe divided by the credit limit you have. For instance, if you have Rs. 100,000/- in credit available on your credit card, and you have a balance of Rs. 50,000/-, your credit utilization rate is 50%.
It is advised to keep your credit utilization ratio below 30%. This way, you can get a maximum credit limit on your credit card within two days. Having a low credit utilization ratio indicates that you do not use too much of your credit to manage your expenses. Also, it is one of the crucial factors that go into deciding your credit score. So, having a lower credit utilization ratio boosts your credit score, and a higher credit score can help you get a higher credit limit.
-
Disclose other sources of income
Your repayment ability is the most crucial factor that your bank or credit card issuers consider to determine your credit card limit. If you have other sources of income or receive a salary increment, you can use it as leverage to increase your credit limit. You will need to submit proof of the same to your credit card issuer.
-
Reduce your financial obligations
When you request a higher credit limit, the credit card company considers the amount of money you owe to them or other lenders. For instance, your home loan EMIs, personal loans, and other credit card bills will be considered before offering you a credit limit. Having too many financial obligations will lead to getting a lower credit card limit. So, it is advisable to get rid of your existing dues before asking for an increase in credit limit.
Your credit card is one of the best ways to manage your expenses. Maximise on it to increase your comfort.
