A credit card has several advantages. It simplifies personal money management and provides you with a credit limit to fulfill your spending demands. The question is if that credit card limit is adequate for you, and if not, what can you do about it?
The amount of credit you obtain through your credit card has an impact on your credit score. It is recommended that you use 25-30% of your credit limit. You should avoid exceeding 40% of your credit limit frequently. A credit limit is the maximum purchasing limit established on your card by your bank or credit card issuer. A credit card with a lower-than-required credit limit can frequently lead to a higher credit usage percentage (CUR). This might have a negative impact on your credit score.
A bigger credit limit on the card might help you maintain a lower CUR and make better use of the credit card. Can you increase your credit card limit? Yes, you can increase your credit card limit.
How to Increase Your Credit Card Limit?
- Boost Your Credit Score
Card issuers believe that customers with high credit ratings are more trustworthy than customers with low credit scores. A better credit score demonstrates financial responsibility and trustworthiness. Focus on maintaining a higher credit score if you want a bigger credit limit on your credit card. Maintain tight financial discipline by repaying debts on time and avoiding needless new borrowing.
- Use Your Card for The Correct Purposes
The credit utilization ratio (CUR) measures how much credit you utilize about the overall credit limit on your card. Lower CUR implies that you are not credit-hungry and are utilizing the credit card as a spending instrument. So, only use your credit card for purchases that will earn you big points and utilize alternative payment methods for any other costs. Once your credit limit has been extended, you can increase transaction frequency while keeping your CUR low.
- Pay Your Credit Card Bill on Time
Better credit card usage translates into higher income for the issuer; therefore, they favor consumers that use the credit card frequently. At the same time, they favor consumers who are less likely to default. In other words, if you use your card regularly and pay your bills on time, you are helping the card company generate more income without putting their money in danger. As a result, if you make credit card bill payment on time, the credit card issuer may raise your credit limit considerably sooner.
- Show the Card Company your Increased Income
Proof of increased income might be quite helpful in increasing your card limit. If your credit limit hasn’t been reviewed in a while, despite your income increases, you may go to them with your most recent ITR and request that they boost your card limit.
- Other Methods to Increase your Credit Card Limit
If your current card provider has not yet up your card limit, you may apply for another credit card from a different issuer with a greater credit limit. You can split your spending across old and new credit cards. Upgrading your existing credit card to a higher variation might sometimes assist enhance the card limit.
A Better Credit Card Limit has Several Advantages. Here are a Few Examples:
- Greater Convenience:
You will no longer have to carry several cards and remember the PINs and passwords for each of them. This also decreases the possibility of deception.
- Credit Usage Ratio Improvement:
If you have a greater credit card limit and spend less than 50% on the card, she has a low card utilization ratio. This increases her credit history and credit score.
- Easier to Secure Loans:
If you have a greater credit limit and a low card use percentage, banks will view her as a financially responsible customer, which will help her when she asks for a loan.
- Excellent for Emergencies or Overseas Travel:
A bigger credit card limit is extremely useful in the event of a major emergency, such as a medical emergency, or while purchasing tickets and hotel rooms abroad.
- Additional Benefits:
A bigger credit card limit is typically associated with a higher quality and improved credit card. This implies that you may receive additional perks such as access to airport lounges, bigger discounts, and complimentary cinema tickets, among other things.
Income, credit history, payback history, and credit score are all characteristics that can be used to increase your credit card limit. These characteristics serve as the foundation upon which banks and credit card issuers decide whether to increase a person’s credit limit.
A combination of these actions can raise your credit limit and help you make better use of your credit card. Once you have a greater credit limit, make sure you continue to follow all recommended practices to get the most out of your credit card.