What is a credit card limit and how to increase the credit limit?

Credit card limits define how much you can borrow with it, which has a direct impact on your spending power and credit score. Understanding how limitations are set and handled allows you to make more informed financial decisions. This blog explains what a credit card limit is, how it's determined, and how to responsibly increase it.

What is the credit card limit?

A credit card limit is the maximum amount you are permitted to borrow using your card. This limit isn't standardised; it is set by the card issuer and is impacted by several factors that evaluate your financial reliability. Key considerations include your credit score, which indicates your history of managing debt, and your income, which demonstrates your capacity to make payments.

To potentially increase your credit limit, it is beneficial to maintain a solid credit history, consistently pay your bills on time, and directly contact your card issuer to request a review of your account.

How is a credit card limit arrived at?

Credit card issuers determine your credit limit through underwriting, a process that assesses your credit quality using factors like credit score, income, and existing debts. Higher credit scores and stable incomes often result in higher credit limits.

Also Read: credit cards: Six reasons why you should have a credit card

How to check your credit card limit?

• Axis Bank App: Log in and check the credit card section to understand your card limit and the available balance. First-time Axis Bank credit card users will need to register and link their card to the app using their card and customer details.
• Internet Banking: Access your account online to view your total and available credit. You can also check your latest statement to check these details.
• Customer care: Contact the customer care team anytime for assistance.
• Phone banking:You may use the dedicated numbers where you can give a missed call or send a specific message to get a response about your balances and limits.

Impact of credit card limit on credit score

Your credit card limit affects your credit score through your credit utilisation ratio, i.e., the percentage of your available credit that you're using. Lower utilisation ratios can positively impact your credit score, while higher ratios may have the opposite effect.

Ways to increase your credit card limits

• Maintain a good credit score:Check your credit report for inaccuracies regularly, and seek to improve it by paying bills on time and minimising outstanding obligations.
• Increase your income: A higher income may qualify you for a higher credit limit.
• Demonstrate responsible credit usage: Consistently using and paying off your credit card might demonstrate to issuers that you are a responsible borrower.

How to request a credit limit increase on your credit card?

To request a credit card limit increase, contact your card issuer through their customer service number or online portal. Be prepared to provide updated financial information, such as income and employment status.

Advantages of credit card limit increase

• Improved credit score: A bigger credit limit can reduce your credit use percentage, thereby improving your credit score.
• Increased purchasing power: A higher limit allows you to make larger purchases without maxing out your card.
• Better emergency coverage: A bigger limit allows you more financial flexibility in the event of an emergency.

Also Read: 6 benefits of using a credit card

Difference between total credit limit and available credit limit

Conclusion

Understanding the nuances of total credit limit versus available credit limit not only helps in maintaining a healthy credit score but also ensures that you make the most out of your card.

Axis Bank credit cards stand out in offering a plethora of benefits. Using a credit card is not just about spending; it is about spending wisely and reaping the rewards that come with it. Remember the importance of understanding your credit limits and consider the added advantages that come with cards, especially if dining and lifestyle perks align with your interests.

Frequently Asked Questions

Is increasing credit card limit good?

Yes. One benefit is that you get a higher limit to spend. Second benefit is that it can help you keep your credit utilisation at a lower level, which in turn has a positive impact on your credit score

What happens if I exceed my credit limit?

Your bank may allow you to spend a certain limit over and above your credit limit, subject to charges. These charges will be mentioned in your credit card’s terms and conditions. Read them carefully before using your credit card.

Why was my credit limit increase request denied?

If you have not submitted any proof of income increase of if you have delayed or missed your credit card repayments, then there are chances that your request for a credit limit increase may be denied.

How much will my credit limit be?

Your credit limit will depend on your income and credit score and is fixed when you apply for your credit card. It may increase later with regular credit card usage.

How can I increase the limit on my credit card?

To increase your credit card limit, contact your card issuer and request an increase.

How do I add money to a credit card?

To fund your credit card, use your online banking account or mobile app.

Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.