How to Negotiate for a Higher Credit Card Limit?

Access to easy credit can open a world of limitless possibilities until you stumble upon the credit card limit. It refers to the amount you can borrow on a credit card without incurring any over-limit fee.

However, this limit is not a fixed sum, and it may increase if you are financially disciplined. While it may not always be possible, you can also negotiate for a higher credit limit with the issuer. Use some of these tips and secure a higher limit on your credit card!

What is a Credit Card Limit?

This is the amount you can borrow on a card in each billing cycle without incurring penalties. It’s in your best interest to check your credit card spending so it doesn’t exceed this limit.

Wondering why? It’s because exceeding the limit can hurt your credit score, making it difficult to get easy approvals on credit in the future. Banks and issuers set this limit when approving credit card applications. It can vary from person to person, as issuers consider various factors when deciding this ceiling. 

How Banks Determine Your Credit Limit

Now that you know that issuers decide your spending limit based on your creditworthiness, here’s a list of crucial parameters to be aware of. Irrespective of whether you apply for a credit card online or offline, these factors will decide your eligibility:

• Credit score
• Income
• Employment status
• Repayment history
• Existing debt

Many credit card issuers also offer cards with predetermined limits. For instance: 

• If a card has a predetermined limit of ₹1 Lakh, the credit limit will remain the same for anyone who chooses the product.
• Your credit score is an essential factor in determining your limit.
• Thus, you may not get a higher ceiling on credit card spending if your credit score is low.

Why Get an Increase in the Credit Card Limit?

A higher limit on your credit card provides several benefits, including:

• It offers higher financial flexibility, as you can easily cover unexpected expenses.
• A higher limit also boosts your purchasing power significantly, helping you make large purchases.
• A higher credit card limit also has the potential to lower your credit utilisation ratio and, eventually, boost your credit score.
• An increased credit limit also allows you to earn more rewards and benefits.
• A credit card with a higher limit saves you from applying for multiple cards and paying additional costs.
• With a higher credit limit, you can negotiate a better interest rate on your card.

How to Negotiate for a Higher Credit Card Limit

Generally, credit card issuers revise the limit, provided that there has been an increase in the user’s income. You can also qualify for an increased credit limit if there has been an improvement in repayment history.

Here are a few tips for you to negotiate for an increased limit on your credit card with the issuer:

Improve Your Credit Score

• A credit score is one of the most important factors determining your credit limit.
• It is like a performance review of your card spending habits.
• You will see a gradual increase in your credit score if you use the card responsibly.
• Check your score before you request an increase in the limit for your card.
• If your credit score has increased considerably, simply contact the credit card issuer to increase the limit.

Make Timely Repayments

• By making all your credit card bill payments on time and in full, you can boost your score
• Note that your credit score will take a hit if you don’t repay your bills on time.
• You can also win your credit issuer’s trust by paying all your bills before the due date.

Request the Card Issuer

• You can drop a request for an increase in the limit.
• However, make such a request only if you feel you have exhibited responsible behaviour in repaying your credit card dues.
• Your credit card issuer may agree to increase your credit limit depending on the reasons you provide.
• You can apply for an increase in the limit of your credit card online or offline by visiting a nearby branch.

Provide Additional Income Information

• Income is another crucial aspect that credit card companies use to determine your credit limit.
• By providing updated proof of income, you can get the desired limit on your credit card.
• Sometimes, banks don’t update your credit score because they are unaware of your salary increase or promotion.
• You can inform the bank about the salary hike and get an increased credit limit based on that.

Clear Your Existing Debts

• If you have any existing home or personal loan obligations, clear these dues before requesting an increase in the card limit.
• Banks will check your ongoing debt before deciding on your request.
• There will be a low probability of an increase in the limit if you already have high debt.

A higher credit card limit has many benefits, but it also brings the temptation to spend more. If you want a card with higher limits while allowing you to track your expenses, get the One Credit Card.

Also Read: Tips to Fulfill Documentation Criteria for Personal Loan

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