Having a credit card is a great convenience today, and most of us have one that we use to shop and pay our bills. However, we are always restricted to the credit card limit, which prevents us from spending beyond a particular amount in a given month.
But putting a limit on a credit card is necessary. If you overspend, you may be unable to clear the pending balance, and lose large amounts of money paying interest on the amount that you owe the credit card company.
The credit card limit varies from company to company and is also different from one user to another. A credit card company takes various factors into account while fixing the limit on your credit card.
How to Increase Your Credit Card Limit
Certain eligibility factors determine increasing the credit card limit. Learn how to increase the credit card limit on your card with these nifty tips. You may be successful by using only one tip, or you may have to use a combination of them:
1. Apply for a New Card
The most straightforward approach is to apply for a new credit card that has a higher credit limit. By getting additional credit cards, your credit gets distributed over several cards, which helps you maintain a good credit score if you pay your bills in time.
2. Request an Increase on an Existing Card
It’s convenient to have the limit increased on an existing card. Your credit card issuer will check your credit history for your eligibility. While you do this, avoid applying for any other card or an increase on one, as it could affect your credit score.
3. Back Your Request with Valid Reasons
Merely requesting an increase is not enough. Put forth the reasons why you are eligible for the increase. For example, you pay your bills regularly, and in full every month, your income recently increased, your credit card utilization is low, and so on.
4. Be Polite
Whether you are on the phone or you send an email or letter to the issuer, use courteous language. The person you talk to is only doing their job, and you are more likely to get what you are asking for by being polite.
5. Make Your Request Reasonable
Ask for an increase that is a practical and realistic figure. Asking for a huge increase, and that too without sufficiently valid reasons can lead to rejection. Further, avoid asking the representative for advice because they are prohibited from doing that.
6. The Balance Transfer Option
Offering a balance transfer can work like magic. When you transfer your balance amount from one card to another, there is usually a 0% interest charged for at least a year, which means you end up saving quite a bit.
Factors Conducive to Increasing Credit Card Limit
Now you know how to increase the credit card limit on your card. You should also be aware of some of the factors that can help you get your credit card limit increased. You can ensure a favourable response to your application with these pointers:
1. Be Prompt in Your Payments
Ensure to repay your monthly credit card bills on time to convince the card issuer that you are financially responsible.
2. Maintain a Low Credit Utilization Ratio
The credit utilization ratio on your credit account is the ratio between your credit card limit and what you actually spend per month. Keeping this number low indicates that you are in control of your finances, and it also gives you a good credit score.
3. Provide Evidence of an Income Increase
Show evidence of an income increase through a recent salary increment, increased salary in a new job, or an alternative source of income. It shows that you have an enhanced repayment capacity.
4. Reduce or Eliminate Some of Your Liabilities
Pay up a remaining mortgage or vehicle loan or get rid of some of your fixed monthly dues. When your credit card company examines your existing debt, they will be convinced if you can show your capacity to reduce your outstanding debts.
5. Work on Your Credit Score
To improve your credit score, pay your bills on time, don’t default on credit card payments, and reduce your outstanding debt. All this makes you more eligible for an increase.
Get Support from an App Like CRED
CRED is an app that enables you to make payments for several cards through a single app. On adding your credit card details to CRED, you can pay your bills which will be credited to your card issuer within a few hours.
You need to have a CIBIL score of 750 or above to use CRED. You get multiple benefits if you use this app for paying your credit card bills. Here are a few advantages you can get by using it:
- All your transactions are made based on your CIBIL score in real-time.
- You will get alerts and reminders regarding bills that are falling due.
- CRED offers rewards in the form of “coins” and “gems” which you can redeem for goods and services from select merchants.
- You get rewarded each time you pay through CRED, which means you’re less likely to miss a credit card payment.
- You are provided different payment options for paying your bills, to suit your existing circumstances.
Having a credit card to pay for goods and services is no doubt a great facility to have. It can be tempting to increase the limit on your card to get access to more. But you must keep in mind that whatever you spend, you have to pay back.
A credit card company will encourage you to spend. The more you spend, the more they earn, and if you delay your payments or default, even better. These companies thrive on the interest you pay, and they can mislead you to unnecessarily pay more.
If you are registered with CRED, you can monitor your payments and pay your credit card bills through the app promptly. CRED not only helps you to pay your credit card bills promptly but rewards you for doing so. It’s a win-win situation.