Credit Card Limit

What is Credit Card Limit

The term credit card limit refers to the maximum amount that can be borrowed on a credit card at any point in time. This limit is decided by the credit card issuing authority and differs from person to person. It is communicated at the time of issuance and remains the same until the bank deems a change is necessary. It is important to be aware of the credit card limit to ensure that your expenses don’t overshoot it. Borrowing more on the card can have a negative impact on your finances. Your credit card limit also directly affects your credit score. A reduced credit score hampers your creditworthiness and your chances of securing a loan in the future.

How to Check Credit Limit on Your Card

To check the credit limit of a credit card, you can opt for any of the below-mentioned means-

1. Check Credit Card Limit Through Net Banking

If you are registered with the bank’s net banking service you can check your credit card limit by following a few easy steps-

• Step 1: Visit the bank’s net banking portal

• Step 2: Use your credentials and log in to your account

• Step 3: Go to the credit card section

• Step 4: Select the credit card for which you want to check the limit

• Step 5: Click on the 'View account summary' option

• Step 6: In the credit card account summary, your credit card limit will be mentioned.

2. Credit Limit Check Through SMS

You can also check the limit of your credit card by sending an SMS to your bank, using the keyword in the approved format, from your registered mobile number. You would get an instant reply from the bank with details regarding your credit card limit.

3. Credit Card Limit Check Through Customer Care

Credit card limit check can also be done in real-time by calling the credit card helpline number of that bank and placing a request with a customer care executive. After verification, the executive will tell you your CC limit.

How to Increase Credit Card Limit

If you are a dependable user who spends wisely and pays the bills on time, the bank will reach out to you to increase your CC limit. However, if you need more funds, you too can initiate the process. You can visit the bank or raise a request through net banking to increase your credit card limit. If you are wondering how to increase your credit card limit, here is a list of things you can do-

Submit Income Increase Proof

In case your income has increased, you can offer your latest payslips to the bank as proof and request to increase your CC limit.

Clear your dues

You can be regular with your payments and increase your credit score so that the bank considers you for a credit card limit increase

Bank Loyalty

You can also opt to hold on to a credit card for a longer duration so that the bank reaches out to you to increase the credit limit of the card.

Reduce Fixed Debts

Work towards reducing your debts such as personal loan EMIs, home loan EMIs etc., as this would create a positive impression with the bank.

Keep Credit Utilisation Low

You must ensure that your credit utilisation ratio, i.e., the amount borrowed against the credit available is low as it improves your credit score.

Apply for a Credit Card

You can apply for another credit card with a higher credit limit and use one or both the cards for transactions.

How Does the Bank Decide the Credit Card Limit

Once you apply for a credit card, the bank considers various factors to determine your credit limit. These include

Yearly income

A higher-income indicates a better spending capacity. As a result, if your income is on the higher side, the chances are more than the bank would offer you a significant credit limit. On the other hand, against a low income, the total credit limit would also be low.

Age

The older you are, the greater your spending capacity. As a result, higher would be your credit limit.

Current debt amount

The amount of money you have borrowed in the past but are yet to repay also has a significant negative impact on your credit score. As a result, if you have availed excess credit in the past but have been unable to repay, the bank would reduce your credit limit.

Credit available currently

The amount of credit that is already with you also has a positive effect on the credit limit you can avail on your card. If you have more disposable income, the bank will look forward to increasing your borrowing limits and your chances of repayment are higher.

Employment status

If you have been employed in your current organisation for a significant time, it indicates that you have a stable job and regular pay. As a result, the bank is able to trust your application as one that is suitable for a higher credit limit. An unstable job and no fixed pay cheques can negatively affect the

Credit score

The better your repayment capacity and past records, the better your chances of getting approved for a higher credit limit. This is because your credit score acts as proof of your financial health.

Credit history

If there is no credit history and credit score to your name, and you have applied for your credit card, the bank might consider giving you a card with a low credit limit as it is unaware of the risk involved. Similarly, if you have a good credit score and a stellar history, the bank will be comfortable in offering you a card with a higher credit limit.

Difference Between Total Credit Card Limit and Available Credit Card Limit

When it comes to the credit card limit, there are two types of limits on your credit card. One is the total credit card limit, while the other is the available credit card limit.

Total Credit Limit

The total credit limit is the maximum amount that you can spend on the card, even if all dues are cleared. For example: If you have a credit card with a limit of ₹1,00,000, it means that you can use up to ₹1,00,000 on the card. This ₹1,00,000 is the total credit limit.

Available Credit Limit

The available credit limit is the amount that is currently available for making transactions. For example: If you have used ₹30,000 out of the total credit limit of ₹1,00,000 on your card, the amount of funds you can borrow on the card gets reduced to ₹70,000. This is called the available credit limit.

It is important to remember that the available limit of credit card changes both with credit card use and repayment. If you are regular with your payments and repay in full, the credit limit will improve. If we consider this in the context of the above example, and you pay back the ₹30,000 you spend on the card, the available credit limit will again be back to its former total, i.e., ₹ 1,00,000.

How Much of the Credit Card Limit Can be Utilised

The amount of money you have spent on your card to the total amount available on the card at any given point of time is expressed as a ratio and is called the credit utilisation ratio. The formula used for calculating your credit utilisation ratio is-