Credit cards are supplied with a large number of benefits, including rewards and cashbacks. If they are used wisely, they help you to manage your expenses and income efficiently. But what if you think that the credit card you own is not enough to cover your expenses. You must go on your credit card for a limit improvement if your credit use ratio (CUR) regularly exceeds 30%.
For example, if your credit card limit is £2 Lakh for a cycle and if your monthly credit card account is exceeded £ You must apply for an improvement regularly. But you must ensure that you have sufficient income to pay your credit card defenses on time. Here is a guide for improving the credit card limit, its benefits and those who have to choose.
Why do you need an increased limit?
A higher credit limit can help you manage your finances better and offers you the opportunity to make large purchases. Furthermore, it will have a positive effect on CUR, an essential factor in maintaining a good credit score.
You can opt for a higher limit on your credit card if you have seen a good improvement in your financial fortunes. Lenders usually approve an improved limit for credit card holders with a higher income, because they are able to easily pay off their debts.
If you have been using your credit card in a responsible manner for several years, you can request an increase in the limit. You can do this by logging in to your account or by calling customer service. You must be willing to provide information about your income, credit history and the reason to opt for a higher limit.
What are the benefits of a higher limit?
Increase in the credit card limit offers various benefits. Here are some of the most important benefits.
1. You have to manage multiple cards: If you get a high credit limit, it is not necessary to manage multiple cards. There is no requirement to remember too many pin codes, to follow different expenses and credit payment cycles. If all your credit needs are paid by a single card, you can efficiently plan, manage and control your expenses.
2. Improved credit scores: Every increase in credit limit improves your ability to borrow more, which automatically reduces your CUR. Low credit use is considered a characteristic of a responsible borrower and has a great value when it comes to calculating your credit scores. A low CUR helps you achieve a higher credit score.
3. An easier access to loans: If you have a long history of timely credit card payments, you can get a higher credit limit. If you have a high credit limit, the chances of getting loans at lower interest rates increases considerably as lenders consider it a sign of responsible borrowing. “A combination of a high credit limit and a low credit -use rate is favorably seen by banks, making it easier to be approved for loans,” said Bank of Baroda in the explanation of the benefits of the increasing credit limit in credit cards.
4. Useful in an emergency: A higher credit limit is quite useful when it comes to managing unprecedented emergency situations or not -planned costs. Unlike other loans, a credit card offers you immediately money, which is useful when navigating through sudden existence.
5. Better rewards: A credit card with a higher credit limit brings you better rewards. The conversion of remuneration points in cashbacks or other benefits is usually more in credit cards with a higher credit limit compared to those with a lower limit. You can take advantage of more important rewards and cashback offers on your improved limit.
How can you increase the credit limit?
You must contact your card that Bank spends for an increase in the credit limit. You can do this online with most banks. You can log in to your credit card account via the online portal of your bank, increase credit limit through the section and follow the instructions.
You can also call customer service or visit your branch and request an increase in the credit limit. You must provide updated financial information that contains proof of income. You must show that you have been a responsible credit card user to improve your chances at a higher limit.
The bank will assess your request and if you meet the criteria of the eligible, your limit will be increased. Sometimes banks may not be aware of changes to your financial status, which makes you eligible for a higher credit card limit.
You could have received a substantial wage increase. But maybe you still use your old credit card with a lower limit. In such cases you can ask the bank to increase the limit. “If your salary has increased, present this information to your credit card emittent with up-to-date salary decrease or bank statements. A higher income often leads to a higher credit limit because it indicates an improved repayment capacity,” said Ja Bank in his tips for raising the credit limit.
Banks also offer you the opportunity to improve the limit after assessing your spending habits and the history of reimbursement. For this it is not necessary to provide documentation or other information.
Increasing your credit card limit is an important financial decision. Although it can help you manage your finances, you must assess your spending habits and potential risks before you request a higher limit.
Allirahan M is a journalist with more than two decades of experience. He has worked with various leading media organizations in the country and has been writing on investment funds for almost 16 years.
