Increase Credit Card Limit – Important Tips and How to Do It?
The credit card limit is the maximum amount of money you can spend using your credit card. Your credit card limit is determined by the card issuer depending on your income, credit score, repayment history, active credit lines, past and present credit behaviour among other factors.
The important thing is, a credit card customer cannot decide on his/her card credit limit. This decision is taken only by the card issuing-bank or financial institution. However, credit card users can take certain steps to help them get a higher credit limit.
How to Increase Credit Card Limit – Tips and Tricks
Following are a few steps to increase your credit card limit:
1. Talk to the Card Issuer
If you are an existing credit card user, you may simply request your card issuer to consider increasing your card limit. The issuer would reassess your credit history and income, and might increase the credit limit basis your eligibility qualifications
2. Maintain a Longstanding Relationship With the Card Issuer
Credit card companies could favour their loyal customers and reward them with an increased credit limit. So, if you’ve been using a credit card for a long time without any defaults, your card issuer might increase your credit limit from time to time, or offer you an upgraded card with a higher credit limit.
3. Never Miss a Single Credit Card Payment
Paying your credit card bills in full on time is very important in improving your credit score. So, if you use your credit card frequently and pay your card bills on time, the issuer is more likely to increase your credit limit.
4. Provide your Latest Income Statement to the Issuer
One of the parameters for increasing the credit card limit is your income. So, when your income increases, or you get a promotion, ensure you furnish your latest income statement to the card issuer to strengthen your case to get a higher credit limit.
5. Opt for a Credit Card Upgrade
If you’re not satisfied with your current credit limit, you can simply check if you’re eligible for an upgraded card from the same or a different card issuer. An upgraded credit card is likely to offer a higher credit limit in additional better benefits.
Why is a Credit Limit Important?
The credit limit is important because it determines your spending capacity on a particular credit card. If you have big-ticket purchases lined up, the credit limit will help you determine whether or not you would be able to purchase with the card.
How to Check the Maximum Limit on Your Card?
Through Net Banking or Mobile Banking
- Step 1: Log in to your bank portal via net banking or mobile banking
- Step 2: Click on ‘Cards’ section, followed by ‘Credit Cards’
- Step 3: If you have multiple credit cards, click on the card variant which you need to check
- Step 4: Click ‘View Account Summary’ to find your total credit limit
Through Customer Support
You can reach out to your bank’s customer support team through phone call or email or SMS, and after completing the verification process, you can simply inquire about your card’s credit limit. Ensure you email or call only authentic numbers and email ids.
What is Credit Utilisation Ratio and How to Calculate it?
Your credit utilisation ratio is the percentage of credit that you’ve used against the total credit available to you.
It’s is calculated using the formula:
Credit utilisation ratio = (Outstanding balance on all your credit cards / Total credit limit of all your credit cards) x 100
- Let’s assume you own one credit card with a total credit limit of ₹2 lakh
- In a particular month, you spend ₹1 lakh on your credit card
- So, your credit utilisation ratio would be: ₹1 lakh / ₹2 lakh X 100 = 50%
That said, you should always try to keep your credit utilisation ratio under 30% to improve your credit score.
How Does the Credit Card Limit Affect the Credit Score?
While credit limit and credit score may not have a direct relationship, there’s a major link – the credit utlisation ratio. If your credit utilisation ratio is higher than 30%, your credit score might get adversely impacted. However, having a high credit limit could play a key role in keeping your credit utilisation ratio under control, which, in turn, could be beneficial for your credit score. As such, you can follow these steps to keep your credit utlisation ratio low:
- Always plan your credit card spends and limit impulsive purchases
- Ensure you always pay your credit card dues in full on time
- Don’t go anywhere near to maxing out your credit card
- If your credit card spends are a substantial part of your credit limit, try to increase your credit limit by upgrading your card
How Much of Your Credit Card Limit Can You use?
While you can use 100% of your credit limit, you’ll be well advised to keep your monthly spends to less than 30% of your credit limit. This would bode well with our credit score and overall finances. Meaning, if your credit limit is ₹1 lakh, ensure your monthly dues never exceed ₹30,000. More importantly, make sure you always repay your total outstanding dues during the interest-free period to avoid interest charges, penalties and a credit score drop.
What are the Benefits of a Higher Credit Limit?
1. Increased Spending Limit
A higher credit limit means a higher line of credit to your name. This gives you a higher spending limit so that you can put big-ticket purchases on your credit card, repay them later or convert them into an EMI.
2. Additional Reward Points
As your spending limit increases, you can spend more on the card. This could help you earn more reward points depending on your card’s policies. Moreover, with an enhanced credit limit, you may also become eligible for a credit card upgrade which can offer additional benefits on your transactions.
3. Better Credit Score
As mentioned earlier, your credit limit impacts your credit utilisation ratio. The ratio refers to the credit that you use against the limit that you have. If you use a high amount of credit against your allotted credit limit, the ratio is high and vice-versa, which could have a negative impact on the score.
However, when your credit limit increases but your spending remains the same, your credit utilisation ratio would go down which would help in improving your credit score over time.
4. Easier Loan Availability
As your credit score improves, so does your loan eligibility as lenders would consider you a creditworthy individual. A high credit score could give you the best available loan offers in terms of desired loan amount, quick approval and lowest available interest rates,
5. Helpful in Emergencies
A high credit limit could be immensely helpful during a financial emergency as it would allow you to quickly make larger transactions and purchases.
Difference Between Total Credit Limit and Available Credit Limit
Total credit limit is the maximum amount you can spend using your credit card. Available credit limit, on the other hand, is the balance amount left after making any card spends until the dues are cleared. When you clear your card dues in full, your available and total limit becomes the same.
- For example, if you can spend a maximum of ₹2 lakh on your credit card, your total credit limit is ₹2 lakh.
- However, if you spend ₹50,000, your available credit limit would reduce to ₹1.5 lakh (₹2 lakh – ₹50,000).
- When you clear the full dues of ₹50,000 after a few days, both your total and available credit limit would be ₹2 lakh.
What to do Before Requesting for a Higher Credit Limit?
You can request your credit card issuer to increase the credit card limit, and your request might get sanctioned. However, before you do so, here are a few points to keep in mind–
- Check whether you are eligible for an increase in the credit card limit. Make a request only if you meet the requirements
- Check your credit report and ensure it is updated with the latest details
- If your income has increased, report the same to the credit card issuer
- Pay off your latest credit card bills fully, so you have no outstanding debt
- Keep your existing debts updated. Credit card issuers might check your existing loans before agreeing to a credit card limit increase
What to Do If Your Credit Limit Request is Denied?
While credit card issuers allow an increase in the limit, your request might get denied too. In such cases, here are some steps that you can take:
- Find out the reason for the rejection. Work on the reasons and resolve them so that it gets accepted the next time your request to increase the credit limit
- Furnish supporting documents, like your latest income statement, to the issuer to strengthen your case
- Improve your credit behaviour by paying your bills on time and managing your debts effectively
- Compare your options and check if you’re eligible for a credit card with another issuer offering a higher credit limit. However, apply for the new card only when you know you’ll be granted a higher credit limit with it
Final word
Your credit limit is an important parameter when you use your credit card and also when you apply for loans. So, know what the limit is all about and how you can increase it to enhance your eligibility. That said, a high credit limit does not mean you use your card recklessly. Ensure you always pay your card dues in full on time to save on interest charges and improve your credit score.
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FAQs
No, there is, usually, no charge to increase credit card limit. The increase is allowed based on your eligibility and your past credit behaviour.
If you don’t pay your credit card dues on time and use the enhanced limit to overspend then an increased credit limit can be harmful for your financial stability.
Some of the factors that determine the credit card limit include your age, annual or monthly income, existing debts, employment status, past credit behaviour, card usage and credit score.
If you exceed the allowed credit card limit, your transaction would be declined. Moreover, the credit card issuer can also charge a penal fee for exceeding the limit.
Yes, multiple credit cards can help you to increase credit card limit. This is because each card comes with its own limit and when you have multiple cards, you can aggregate the limits in all cards to get a higher limit.
