Tuesday, April 23, 2024

Maximising Spending Capabilities: How to Increase Credit Card Limit

credit card

There are a few things to consider if you are wondering how to increase credit card limit. A higher credit card limit has a few implications, such as: 

  • The option to spend more with your credit card
  • Access to larger credit card loans
  • An opportunity to lower your utilisation ratio

While these can all be upsides, proper management is key, especially if you aim to maintain your credit score. So, how do you increase your credit card limit? Read on to find out.

What is a Credit Card Limit?

Here’s a brief overview of what this limit is:

  • It is the maximum amount that you can spend using your card in a billing cycle
  • For instance, if your card’s limit is ₹50,000, you can’t spend more than this amount in a month
  • Card issuers set this limit based on various factors before approving your credit

How Issuers Determine Credit Card Limit

Credit card issuers set a limit on your card based on a few parameters. Here’s a snapshot:

  • Your card’s limit depends on your current income and credit history
  • Some card issuers also offer a predetermined limit, which applies to everyone who uses the product
    • Others depend on an in-depth analysis of your creditworthiness to determine the same
  • When you apply for a card, the issuer reviews your credit score to decide whether to approve your request
  • Common criteria also include your age, income and employment status, along with your score
  • Note that you will get a lower limit on your card if you are new to credit or have a low credit score

How to Increase Credit Card Limit

Learning how to increase credit card limit is important to enjoying a better experience. Here are a few tips. 

Update Your Latest Income Details

    • Income is one of the most important factors in deciding your credit limit
    • In most cases, issuers don’t have the consumer’s latest income documents to revise their credit limit
  • Hence, you can get the desired credit limit by furnishing documents proving an increase in your salary
  • To get an increased limit, all you have to do is submit your payslips to the card-issuing institution

Check For Errors in Credit Report

  • Credit reports often have certain inaccuracies due to improper reporting
  • Your lower credit limit may be an outcome of these errors in your credit report
  • If you spot such mistakes, contact your lender or try the grievance redressal options offered by the credit bureau to rectify them
  • You can track your credit report regularly with credit monitoring services offered by these bureaus

Pay Your Existing Dues on Time

  • By paying your credit card bills on time, you can request for a hike in your limit
  • Paying your bills before the due date demonstrates your repayment capability
  • It also builds trust and displays creditworthy behaviour
  • On the other hand, defaulting on your bill payments can result in a damaged credit score and reduced credit limit over time

Don’t Max Out Your Credit Cards

  • It only makes sense to use credit cards for certain purchase categories
  • Using your card for all your expenses can lead to higher bills due, which you may find challenging to clear on time
  • Spending 30%-40% of your credit limit is advisable because a higher utilisation ratio can harm your credit score
  • Do not be overly dependent on credit and the issuer may raise your credit limit

Pay Off Your Existing Loans

  • Before applying for an increased limit, clear your existing dues 
  • Card issuing companies check your current debt status before acting on your request

Benefits of Higher Credit Card Limit

Having a high credit limit unlocks many advantages, which include the following: 

Brings Credit Utilisation Ratio Down

  • By raising your credit card limit, you can reduce the percentage of the amount you spend as compared to the total amount you can use.
  • This will also help you improve your credit score, as long as you use the same amount as before.

Access to Cheaper Credit

  • You can get a higher credit limit only if you have a good credit score
  • A perfect credit score helps you secure other forms of credit on favourable terms

Assists Financially in Emergencies

  • Having a raised credit limit ensures that you can use the additional amount if an emergency arises
  • In case you are short on funds for unwarranted expenses, you can use your card to settle those payments

Earn More Rewards

  • With a hiked credit limit, you can use your card for various spending categories, like groceries, fuel, shopping and utility bills.
  • Hence, it allows you to earn more rewards in the form of points, miles, or cashback.

An increased credit card limit is always a great way for you to access flexible spending capabilities. However, as a rule, you should not max out your credit card limit. If you want a card that allows you to control all your spending, get the One Credit Card.

With its powerful mobile application, you can claim 5X rewards on your top 2 spending categories, track all your spending, and set transaction limits with ease. Apply for the One Credit Card to spend confidently and get more with every purchase!

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