Credit Cards come with virtually limitless power. Find out how increasing your credit limit could give you some amazing benefits.
When Shikha Sharma recently received her Credit Card from ‘Always First Bank’ she was elated. Her Credit Card came with a bunch of amazing perks and benefits. Whether it was reward points, cash back offers or even discounts on dining, she had it all.
However, when applying for her card, Shikha requested for a credit limit of only Rs. 50,000 after taking into consideration her expenses and monthly income.
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A few months later, Shikha had to travel to Singapore on work for three weeks. When she got there, she realised that she was very close to exhausting her credit limit on her card because she had to pay for her expenses in a foreign currency.
Since she eventually maxed out her Credit Card and spent all the money she carried with her, she had to borrow money from her colleagues to manage her expenses for the final week of her stay there.
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Shikha could have avoided this situation by simply increasing the credit limit on her Credit Card in advance. This would have allowed her to make the most of her card without the added burden of debt.
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There are a lot of people who wonder whether they should increase their credit limit or not. It wouldn’t be wrong to say that every individual, at some point or another, would want to increase their card’s limit. So, it’s obviously better to do it at the right time when the benefits can be easily maximised.
Most banks nowadays offer lucrative Credit Card deals to their customers and even offer high card limits that allow holders to make big purchases on a monthly basis.
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If you still aren’t particularly convinced, here are 4 excellent reasons why increasing the limit on your card could prove to be a profitable decision for you.
Enhances Your Credit Score
A common myth that does the rounds frequently is that the lower your credit limit, the better your Credit Score. However, a higher credit limit can actually enhance your Credit Score more than a lower limit can.
The amount of revolving debt versus the credit limit available to you matters a lot in the calculation of your Credit Score. The assumption is that having a superior credit limit means you are capable of managing more credit in a better way.
This is a fine way to impress banks and lenders with your credibility. Remember, if you show that you can manage a high credit limit, it automatically proves that you are responsible with your finances.
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Safety Net Against Financial Emergencies and Contingencies
When you increase the credit limit on your card, you give yourself a better chance of handling financial emergencies. A higher Credit Card limit will give you a considerable amount of time to repay sudden exorbitant expenses.
With a higher limit on your Credit Card you can also be well prepared in case of a sudden medical emergency. Although the right way to protect yourself and your family from such emergencies is through a smart Health Insurance plan, a Credit Card can also help you pay ‘over the counter’ for unavoidable expenses.
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High Credit Limit =Higher Rewards
In case your bank provides you with a high credit limit, try using your card to pay for purchases that you would normally pay for with cash.
For instance, try and make payments for your insurance cover and utility bills using your card since it’ll help you accumulate more reward points. These reward points can be redeemed for complimentary gifts such as free airline or movie tickets.
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Easy To Monitor Compared To Multiple Credit Cards
You may think that holding multiple Credit Cards with different credit limits are a safer bet than having a single Credit Card with an upper limit, but keep in mind that multiple Credit Cards aren’t easy to monitor.
They increase your risk of debt because you may not always be able to track your expenses if you have more than one card. This in turn affects your Credit Score.
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Besides, holding several Credit Cards could turn out to be expensive since banks levy hidden charges such as maintenance fees, processing fees, annual fees etc. Hence, it would make sense to increase the credit limit on your existing Credit Card.
Keep in mind though, that a Credit Card which comes with a higher credit limit also comes with the risk of over spending. Being diligent with your Credit Card payments and controlling your spending habits should be a top priority.
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To increase the credit limit on your card you can visit your bank’s official website or reach out to their customer care via phone banking. Make sure you understand all the terms and conditions, the relevant charges and any implications before going ahead.
And if you’re looking to get a Credit Card, we have loads of them here at BankBazaar.