Credit limits are crucial for credit card customers, as all financial transactions depend on them. These limits determine how much a person can spend using a credit card.
While it’s possible to request a credit limit increase from the card issuer, it’s crucial to understand that surpassing the limit can lead to over-limit charges and a detrimental impact on the credit score. This, in turn, can diminish the likelihood of future loan approvals.
Credit card limits vary among individuals and can be adjusted based on credit scores and income. Timely bill payments and maintaining a good credit score can also prompt the bank to increase the limit.
In case of large purchases that cannot be paid in full immediately, individuals can opt for a flexi-pay or EMI (Equal Monthly Installments) scheme, though this may accrue interest.
While having multiple credit cards from different providers can boost the overall credit limit, it’s imperative to use them judiciously to steer clear of financial stress.
By maintaining an average credit utilization ratio of around 30 percent of the total credit limit, individuals can improve their credit scores and potentially qualify for a higher limit.