Image Source : AP Credit cards
Understanding credit cards can feel overwhelming, especially with options like increasing your credit limit. If you’re considering this option, using your card frequently and making full payments on time can often lead to automatic increases in your credit limit by your bank.
Increase in income
If you experience a boost in your income, you can provide updated income proofs, such as payslips, to your bank. This might prompt them to upgrade your card and raise the limit.
Apply for a new card
Another option is to apply for a new credit card that offers a higher limit. However, keep in mind that this approach may involve a hard inquiry into your credit report and could temporarily affect your credit score.
Patience
For long-term cardholders with a good payment history, banks sometimes offer spontaneous increases in credit limits.
What are the advantages of increasing credit card limit?
Increasing your credit limit while maintaining disciplined spending habits can lead to an improved credit score. By keeping your credit utilisation ratio low, you demonstrate responsible credit usage, which is a key factor in credit score calculations.
The lower ratio reflects positively on your financial management skills and can contribute to a healthier credit profile. Consolidating your credit card usage into one card with a higher limit can simplify your financial management. It’s easier to keep track of one account rather than juggling multiple cards with varying limits and due dates.
Moreover, individuals with high credit limits often enjoy preferential treatment from banks, making it easier to qualify for loans at lower interest rates and access other financial products. A higher credit limit grants you more spending power, which can translate into greater rewards if you pay your bills in full and on time.
Many banks offer additional reward points and benefits to high-limit cardholders, such as airline miles or cashback rewards. These perks can add up to significant savings or enhanced lifestyle benefits over time.
