What is Credit Card Limit and How to Increase It?

08 May 2023

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A credit card limit is the maximum amount that a cardholder can spend on their respective credit card within a given period of time. And if you’re looking to increase your credit card limit, it’s important to consider your financial goals. If you’re looking to build credit, an increased credit limit could help you get there, as long as you’re careful to not spend more than you can afford.

What is a Credit Limit?

The credit limit is the overall amount of charges that you are allowed to put on your credit card. The limit is determined by the credit card issuer and is often determined by the cardholder’s credit score, income, and other factors. The credit card limit is decided depending on the card and the issuer.

BOB Financial (wholly owned subsidiary of Bank of Baroda) offers an array of consumer & commercial credit cards with good credit limit and up to 50-days interest free credit card. The product suite has cards for all segments of customers with varied needs, including but not limited to everyday Shopping Cards, Travel Cards, Business Cards for large corporates as well as MSMEs. There are exclusive credit cards for Defence Personnel including the Indian Army, Indian Navy, the Indian Coast Guard, Assam Rifles, professionals like ICAI, ICMAI & ICSI, co-branded cards with HPCL, Snapdeal, IRCTC, Premium Lifestyle cards like Eterna, Premier, and more such exciting variants. Discover range of Bank of Baroda credit cards at BOB Financial .

How do Banks Determine Credit Card Limit?

Banks consider the following factors while determining your credit card limit:

  • Payment History: Information regarding whether you have been making your payments on time and if any late payments have been made is part of your payment history.
  • Credit Score: A credit score ranging from 300 to 850 that evaluates your creditworthiness in the eyes of potential creditors.
  • Income & Age: Along with your age, banks look at your earnings as one of the measures for gauging your capacity to return the money you have borrowed.
  • Credit utilization: Banks monitor the proportion of your current credit limits utilised by you.
  • Liabilities: Banks also check if there is any loan or liability attached to the applicant.

How to Check the Maximum Limit on Your Card?

You can check your credit card limit in the following ways:

1.Through Net Banking

  • Step 1: Visit your bank’s net banking portal.
  • Step 2: Log in to your account.
  • Step 3: Go to the credit card section.
  • Step 4: Select the credit card you wish to check the limit of.
  • Step 5: Click on the option 'View account summary'.
  • Step 6: Your credit card limit will be displayed in the credit card account summary.

2.Through sending a request to your bank from your registered mobile number.

3.Through calling the bank's credit card customer care helpline number.

How to Increase Credit Card Limit?

If you’re looking to increase your credit card limit, the process can be relatively simple. Generally, you’ll need to contact your credit card issuer and explain why you need the increase. Factors such as an increased income or a higher credit score can help your case when requesting a higher credit limit. The issuer may also require that you submit additional documentation, such as proof of income or financial statements, to prove that you’re not overextending yourself.

Another way to increase your credit limit is to apply for a new card. Credit card issuers usually increase the limits of new cardholders to entice them to use the card. This can be a great way to get a higher credit limit, but make sure to read the terms and conditions to make sure the new card is the right fit for you.

Benefits of Increasing Credit Limit of Your Credit Card

  • Increasing the credit card limit of your credit card decreases the amount of credit you are using. Having a higher limit can help you lower your credit utilisation rate. The lower the credit utilisation rate, the better your credit score will be.
  • It is also very beneficial in times of crisis. Having a high credit limit can be very helpful in both financial and health related emergencies.
  • Increasing your credit card limit gives more rewards and additional advantages. Most credit cards with a higher limit come with more rewards and additional perks as compared to those with a lower limit.
  • Another benefit of increasing credit card limit is that it makes it easier to be approved for a loan - a combination of a high credit limit and a low credit utilisation rate is seen favourably by banks, which makes it easier to get approved for loans.

How does your Credit Card Limit affect your Credit Score?

An individual's credit history is quantified into a numerical value known as a credit score. This score is used to measure the person's creditworthiness. The higher the credit score, the better the creditworthiness and vice versa. The utilisation of a credit card's limit impacts the credit score each month since this information is conveyed to credit reporting agencies. According to this data, the credit utilisation ratio is computed. To maintain a good cibil score for credit card , it is essential to use the credit card limit judiciously since a rise in the credit utilisation ratio above 10% to 30% can hurt the credit score.

Difference between Total Credit Limit and Available Credit Limit

Total Credit Limit: The Total Credit Limit is the highest amount that you avail on your card, set by your bank. If you exceed this amount, your card will deny any further payments and the Bank will impose a fee for going over the limit.

Available credit limit: The available credit limit is the amount of credit that you have left after all prior charges have been made at that point in time. Suppose if your card has a total credit limit of Rs 80,000, and you spent Rs. 20,000, your available credit limit is Rs. 60,000.

FAQs on Credit Card Limit

Is it good to increase my credit card limit?

Yes, it will lower the credit utilisation ratio and improve your credit score as well.

How much is the credit card swipe limit per day?

Generally, the bank sets the credit card daily limit which can be modified by you based on your expenses and the total credit card limit.

What happens if I exceed my credit limit?

Bank will charge you an over-limit fee.

Is it good to accept an increase in my credit limit?

Only if you are seeking to borrow more on your credit card.

Should I decrease my credit card limit?

No, because this may impact your credit score.

What is a good credit limit?

A good credit card limit will always help you maintain a credit utilisation ratio within the range of 10% to 30%.

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    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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