5 MinsDec 15, 2020
Geetanjali Kapoor, 32 years, works for an IT firm. She’s just been promoted and has got a salary increase. But she finds it inconvenient to keep track of the spending limits and payment dates on her several credit cards. She wants one credit card with a large limit as it would be convenient to use and make payments.
A higher credit limit comes with multiple advantages. Here are few:
1. More convenience: Geetanjali won’t have to carry around multiple cards, remembering the PINs and passwords for each of them. This reduces the chances of fraud as well.
2. Improvement in credit utilization ratio: If Geetanjali has a higher credit card limit and spends less than 50% on the card, it means she has a low card utilization ratio. This helps improve her credit record and credit score.
3. Easier to get loans: With a large credit limit and low card utilization ratio, banks will classify Geetanjali as a financially responsible customer, something that will stand in her favour when she applies for a loan.
4. Great for emergencies or international travel: A higher credit card limit comes of great use in case of big-ticket emergencies like a medical emergency or booking tickets and hotel rooms abroad.
5. More benefits: A higher credit card limit usually comes with better quality and upgraded credit card. This means Geetanjali could get more benefits like access to airport lounges, higher discounts, free movie tickets, among other things.
How Can Geetanjali increase her credit card limit?
A credit limit is the maximum purchase limit set by your bank or credit card company on your card. For instance, if you have a credit card limit of Rs. 50,000, you can’t swipe it for beyond that amount. Here are a few ways that Geetanjali can increase her credit card limit.
[Also Read: How To Apply For A Credit Card Online And Enjoy Best Deals]
1. Increase limit on current card: From the multiple cards that Geetanjali uses, there will be one card that she uses more often than others. If she has ensured that her credit record is clean, she can request the bank to increase her credit limit on that card. If she has a good history, the bank may increase her credit limit.
2. Inform the bank of her promotion and salary increase: Sometimes, banks don’t increase your card limits because they are unaware of your new financial position. Since Geetanjali has got a salary hike, she should inform her credit card issuers about it. She can either ask them to increase the credit limit on her existing cards or issue new cards with a higher credit limit. The banks may ask her to show proof of income before making a decision.
3. Annual increase in credit limit: Generally, banks increase credit card limits of their customers based on their repayment records, credit scores and credit profiles. If Geetanjali ticks all the boxes, her limit will go up automatically.
All the means to upgrade credit card limits have some common factors – income, credit record, repayment history and credit score. These parameters are the foundation on which banks and card companies decide to increase one's credit limit.
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