As a Credit Card user, your credit limit might not always match your financial needs and you might wonder how to increase your credit card limit. In such cases, it can be frustrating to be unaware of how to increase the credit limit on your Credit Card. Fortunately, these six tips can help you raise your Credit Card limit.
Credit Card Limit Explained
A Credit Card limit is the maximum amount of money you can borrow with your credit card. This limit is set by the Credit Card company or bank based on your eligibility and the type of Credit Card you use. For instance, if your Credit Card company sets your limit at Rs 50,000, you cannot make purchases or transactions exceeding that amount. Let’s have a look at some tips on how to increase your credit card limit.
Tips to increase your Credit Card limit
Boost Your Credit Score
It is an essential factor that determines your Credit Card limit. If you have never defaulted on your Credit Card payments, you are more likely to get a higher credit limit. You should pay your monthly bills on time to increase your credit score. This will show the Credit Card bureau that you use your card responsibly, which could lead to an increase in your credit limit. Many people try to do so by balance transfer credit card from account however one should also assess the risks involved.
Repay Dues on Time
Clear any pending Credit Card dues before requesting a credit limit increase. Make sure to pay off bills in full before the due date. This will show the Credit Card company that you can manage your debts well, thus, increasing your chances of getting a higher credit limit.
Keep Credit Utilisation Ratio Low
Experts suggest keeping the credit utilization ratio below 30% to increase your chances of getting a higher credit limit. A low credit utilization ratio shows that you are not relying too much on credit and can manage your finances responsibly.
Show Proof of an Increase in Income
If you have received a raise or found an alternate income source, provide proof of the same to the Credit Card company. This will show them you have a higher earning potential and can repay your dues on time. As a result, you may get a higher credit limit.
Reduce Financial Obligations
Suppose you have too many financial obligations such as Home Loan EMIs, Personal Loans, or pay credit card bill online Credit Card bills. In that case, reducing them before requesting a credit limit increase is advisable. This will show the Credit Card company that you have fewer financial burdens and can handle higher credit limits responsibly.
Apply for a New Card
If everything else fails, applying for a new Credit Card with a higher credit limit may be the alternate solution. However, ensure you have been disciplined with your Credit Card payments before applying for a new card. This will increase your chances of getting a new card with a higher credit limit.
Advantages of Boosting Your Credit Card Limit
If you’re a credit card holder, you may already understand some of the benefits of increasing your credit limit. But let’s take a closer look at how growing your card’s credit limit can benefit you in several ways.
Makes It Easier to Get Loans: A higher credit limit indicates to banks and other lenders that you are a responsible borrower. As a result, you are more likely to receive loan approval.
Assists in Emergencies: A higher credit limit always comes in handy during an emergency, whether a health crisis, home repairs, or a car accident. With a higher credit limit, you can quickly access funds to cover unexpected expenses without worrying about borrowing from friends or family or taking a high-interest loan.
Access to Perks: High credit limit cards often come with added benefits such as airport lounge access, hotel memberships, cashback, and other perks. These perks can help you save money and enjoy additional benefits.
Also Read: The Average Credit Limit for First Credit Cards
Conclusion
Increasing your credit card limit can have several benefits. It can help reduce your credit utilization ratio, making getting loans and credit products easier and providing an added layer of financial protection during an emergency.
By boosting your credit score, repaying your dues on time, keeping your Credit Utilisation Ratio low, showing proof of increased income, reducing financial obligations, or applying for a new card, you can successfully increase your Credit Card limit and have greater financial flexibility.
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